Banri Ito, Zhaoyuan Xu, Naomitsu Yashiro, 03 December 2013

Fixed and sunk costs are widely accepted as important determinants of export behaviour. This column argues that such costs may be shared by agglomerated collections of firms, and presents evidence of agglomeration’s effects on exporting in China. Agglomeration is more effective in low-tech sectors and land-locked areas. Surprisingly, the effect of agglomeration is different for indigenous and foreign firms.

Hiroyasu Inoue, Kentaro Nakajima, Yukiko Saito, 25 October 2013

Distance matters – in trade, and in knowledge creation. Policies encouraging industrial clustering rely on this notion. This column presents evidence that geographic distance is a significant impediment to inter-establishment research relationships in Japan. This friction persists over decades, suggesting that advances in communication technology are no substitute for face-to-face interaction.

CEPR Policy Research