Estimating dynamic localization economies: the inadvertent success of the specialization index and the location quotient. Issue 1 (2nd January 2018)

• Record Type: Journal Article
• Authors: Fracasso, Andrea; Vittucci Marzetti, Giuseppe
• Is Part Of: Regional studies. Volume 52:Issue 1(2018)
• Page Start: 119
• Page End: 132
• Publication Date: 2018-01-02
• Subjects: agglomeration economies -- localization economies -- location quotient -- Marshall–Arrow–Romer (MAR) externalities -- specialization index; 聚集经济 -- 在地化经济 -- 区位商数 -- 马歇尔（MAR）外部性 -- 专殊化指标; économies d'agglomération -- économies de localisation -- quotient de location -- externalités de Marshall–Arrow–Romer (MAR) -- indice de spécialisation; Agglomerationsökonomien -- Lokalisierungsökonomien -- Standortquotient -- Marshall-Arrow-Romer-(MAR)-Externalitäten -- Spezialisierungsindex; economías de aglomeración -- economías de localización -- cociente de localización -- efectos externos de Marshall–Arrow–Romer (MAR) -- índice de especialización; C21 -- O18 -- R12 -- R15; Regional planning -- Periodicals; Regional planning -- Great Britain -- Periodicals; 307.14
• DOI: 10.1080/00343404.2017.1281388
• Languages: English
• ISSNs: 0034-3404

Abstract

ABSTRACT: Estimating dynamic localization economies: the inadvertent success of the specialization index and the location quotient. Regional Studies . After addressing definitional issues on the concepts of concentration and specialization, the paper reviews the justifications for and the interpretation of some indicators of localization economies used in the empirical literature on agglomeration economies: specialization indexes and location quotients. A simulation exercise shows under what conditions certain specifications lead to biased estimations of dynamic localization (Marshall–Arrow–Romer – MAR) externalities. The results suggest that applied researchers can choose between the size of the local industry, the specialization index and the location quotient to proxy for these externalities as far as they also encompass a correct proxy for the size of the local economy.