Density and Allocative Efficiency in Turkish Manufacturing
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Title: |
Density and Allocative Efficiency in Turkish Manufacturing |
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Number: |
21/25 |
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Author(s): |
Orhun Sevinç | |
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Language: |
English |
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Date: |
August 2021 |
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Abstract: |
Using administrative data covering the economic geography of Turkish manufacturing firms I show that density increases a location’s productivity through both typical firm productivity and stronger association of firm size and productivity—a measure of within-sector allocative efficiency. IV estimates suggest a density elasticity of allocative efficiency that accounts for about one third of the overall impact of density on productivity. A model with decreasing returns to scale and convex cost of avoidance from the burden of regulations can explain the estimated density-allocative efficiency relationship on the grounds that denser locations provide lower degree of internal diseconomies. |
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Keywords: |
Density, Allocative efficiency, Cities in developing economies |
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JEL Codes: |
R10 |
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