TY - JOUR
T1 - Scale economies and industry agglomeration externalities
T2 - A dynamic cost function approach
AU - Morrison Paul, Catherine J.
AU - Siegel, Donald
PY - 1999/3
Y1 - 1999/3
N2 - Scale economies and agglomeration externalities are alleged to be important determinants of economic growth. To assess these effects, we outline and estimate a microfoundations model based on a dynamic cost function specification. This model provides for the separate identification of the impacts of externalities and cyclical utilization on short-and long-run scale economies and input substitution patterns. We find that scale economies are prevalent in U.S. manufacturing, cost savings and scale effects often attributed to internal inputs may be due to external factors, and supply-side agglomeration effects are greater than demand-side, especially in the long run.
AB - Scale economies and agglomeration externalities are alleged to be important determinants of economic growth. To assess these effects, we outline and estimate a microfoundations model based on a dynamic cost function specification. This model provides for the separate identification of the impacts of externalities and cyclical utilization on short-and long-run scale economies and input substitution patterns. We find that scale economies are prevalent in U.S. manufacturing, cost savings and scale effects often attributed to internal inputs may be due to external factors, and supply-side agglomeration effects are greater than demand-side, especially in the long run.
UR - http://www.scopus.com/inward/record.url?scp=0001571358&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0001571358&partnerID=8YFLogxK
U2 - 10.1257/aer.89.1.272
DO - 10.1257/aer.89.1.272
M3 - Article
AN - SCOPUS:0001571358
SN - 0002-8282
VL - 89
SP - 272
EP - 290
JO - American Economic Review
JF - American Economic Review
IS - 1
ER -