The location of domestic and foreign production affiliates by French multinational firms

The location of domestic and foreign production affiliates by French multinational firms

In this paper we combine two traditions in the analysis of firms’ location patterns. One led by trade economists who try to understand why do firms invest abroad, and another one led by urban/regional economists, who frequently use patterns of inter-regional or inter-city choices to estimate agglome...

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Bibliographic Details
Published in:Journal of urban economics Vol. 68; no. 2; pp. 115 - 128
Main Authors: Mayer, T., Mejean, I., Nefussi, B.
Format: Journal Article
Language:English
Published: New York Elsevier Inc 01-09-2010
Elsevier
Elsevier BV
Series:Journal of Urban Economics
Subjects:
Agglomeration economies
Conditional logit model
Decision making
Economic geography
Economic theory
Economics and Finance
Foreign enterprises
Foreign investment
France
Humanities and Social Sciences
Investment decision
Location choice
Location choice Multinational firms Agglomeration economies Conditional logit model
Location of enterprises
Location of industry
Logit models
Multinational corporations
Multinational enterprises
Multinational firms
Studies
Urban agglomeration
France
F1
Conditional logit model
F2
Location choice
Multinational firms
Agglomeration economies
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Summary:In this paper we combine two traditions in the analysis of firms’ location patterns. One led by trade economists who try to understand why do firms invest abroad, and another one led by urban/regional economists, who frequently use patterns of inter-regional or inter-city choices to estimate agglomeration economies. We contribute to the trade-motivated set of papers on location choices by adding the domestic country in the choice set, while accounting for firm’s heterogeneity in the choices. Our econometric results using French firm-level data show an important “home bias” in manufacturing investment decisions. A crucial finding, which bridges with our contribution to the agglomeration literature, is that the spatial clustering of affiliates belonging to the same industrial group accounts for the lion’s share of this home bias.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0094-1190
1095-9068
DOI:10.1016/j.jue.2010.03.006