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Multiregional Firms and Region Switching in the US Manufacturing Sector

Author

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  • Antoine Gervais
Abstract
This paper uses data on US manufacturing firms to study a new extensive margin, the reallocation of resources that takes place within surviving firms as they open and close establishments in different regions. To motivate the empirical analysis, I extend existing models of industry dynamics to include production-location decisions within firms. The empirical results provide support for the mechanisms emphasized by the theoretical model. In the data, only about 3 percent of firms make the same product in more than one region, but these multiregional firms are more productive on average compared to single-region firms, and they account for about two-thirds of output. The results also show that "region-switching" is pervasive among multiregional firms, is correlated with changes in firm characteristics, and leads to a more efficient allocation of resources within firms.

Suggested Citation

  • Antoine Gervais, 2015. "Multiregional Firms and Region Switching in the US Manufacturing Sector," Working Papers 15-22, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:15-22
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    References listed on IDEAS

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    Cited by:

    1. Gervais, Antoine & Jensen, J. Bradford, 2019. "The tradability of services: Geographic concentration and trade costs," Journal of International Economics, Elsevier, vol. 118(C), pages 331-350.
    2. Chen, Hongwen & Cheng, Ken & Zhang, Meiyang, 2023. "Does geographic proximity affect firms’ cross-regional development? Evidence from high-speed rail construction in China," Economic Modelling, Elsevier, vol. 126(C).

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    More about this item

    Keywords

    Multiregional firms; firm heterogeneity; industry dynamics; monopolistic competition; proximity-concentration tradeoff.;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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