@article{bda43277240542dab831504728dcbadb,
title = "Agglomeration, Misallocation, and (the Lack of) Competition†",
abstract = "Industrial agglomeration policies may limit competition. We develop, validate, and apply a novel approach for measuring competition based on the comovement of markups and market shares among firms in the same location and industry. Then we develop a model of how this reduction in competition affects aggregate income. We apply our approach to the well-known special economic zones (SEZs) of China. We estimate that firms in SEZs exhibit cooperative pricing almost three times as intensively as firms outside SEZs. Nevertheless, we model the aggregate consequences of SEZs and find positive effects because markups become higher but also more equal.",
author = "Brooks, {Wyatt J.} and Kaboski, {Joseph P.} and Li, {Yao Amber}",
note = "Funding Information: * Brooks: University of Notre Dame (email: wbrooks@nd.edu); Kaboski: University of Notre Dame and NBER (email: jkaboski@nd.edu); Li: Department of Economics and Faculty Associate of the Institute for Emerging Market Studies (IEMS), Hong Kong University of Science and Technology (email: yaoli@ust.hk). Benjamin Moll was coeditor for this article. We are thankful for comments received from David Atkin, Timo Boppart, Hugo Hopenhayn, Oleg Itskhoki, Gaurav Khanna, Daniel Xu, participants in presentations at: Bank of Portugal Conference on Monetary Economics; BREAD; CEMFI; Cornell University; Dartmouth College; Duke University; the Federal Reserve Bank of Chicago; HKUST IEMS/World Bank Conference on Urbanization, Structural Change, and Employment; the London School of Economics/University College of London; London Macro Development Conference; NEUDC; Northwestern University; Princeton University; SED; SITE; the Taipei International Conference on Growth, Trade and Development; the University of Cambridge; the World Bank; and Yale University. We have also benefited considerably from comments of Ben Moll and three anonymous referees. We are thankful to the International Growth Centre and the HKUST IEMS (grant IEMS16BM02) for financial support. Authors are listed in alphabetical order. †Go to https://doi.org/10.1257/mac.20180443 to visit the article page for additional materials and author disclosure statement(s) or to comment in the online discussion forum. Publisher Copyright: {\textcopyright} 2021. All Rights Reserved.",
year = "2021",
doi = "10.1257/mac.20180443",
language = "English (US)",
volume = "13",
pages = "483--519",
journal = "American Economic Journal: Macroeconomics",
issn = "1945-7707",
publisher = "American Economic Association",
number = "4",
}