This chapter discusses frontier topics in economic geography as they relate to firms and agglomeration economies. The chapter focuses on areas where empirical research is scarce but possible. The chapter first outlines a conceptual framework for city formation that allows us to contemplate what empiricists might study when using firm-level data to compare the functioning of cities and industries with each other. The chapter then examines a second model of the internal structure of a cluster to examine possibilities with firm-level data for better exposing the internal operations of clusters. An overwhelming theme of the review is the vast scope for enhancements of our picture of agglomeration with the new data that are emerging.
This paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four groups: workers, firm owners, consumers, and suppliers of material goods. Using a difference-in-differences strategy on firm-level data, we find that: firm owners pocketed more than 55 percent of the VAT cut; consumers, sellers of material goods, and employees shared the remaining windfall with consumers benefiting the least; and the employment effects were limited. (JEL H22, H25, L83)
Abstract
We find firm-level evidence that US banks receive preferential treatment in countries under IMF conditionality. We rely on investment location decisions to infer firms’ expectations about future profits and find that US firms are approximately 53 percent more likely to acquire financial firms in countries under financial conditionality. IMF programs without financial conditionality and FDI in other sectors serve as placebo tests. Financial conditionality has weak effects on investment decisions by non-US firms, which implies a political-economy interpretation. Firm-level data indicate that the distinctive behavior of US firms is not due to advantages of scale or to a US-firm fixed effect, but to US influence in the IMF. Firms from other major IMF shareholders benefit as well, but the effects are much weaker. The effects are concentrated in the politically relevant firms that have local affiliates, which is consistent with the interpretation that firms lobby for preferential treatment.
Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data
