Testing geographic and economic distance of agglomeration economies

Purpose The purpose of this paper is to test geographic and economic distance of industrial agglomeration. Design/methodology/approach Based on a recent census database in China, we estimate the production function of Chinese firms, focusing on the impact of agglomeration economies. Findings The estimation results provide strong evidence that agglomeration effects decline with increasing geographic and economic distance. Originality/value Previous studies examine agglomeration effects at certain geographic and industrial level, but largely ignore that agglomeration benefit may be different at different levels of geography and industry. This paper contributes to the literature by examining the geographic and economic distance of agglomeration economies, and shows a clear pattern on geographic and industrial scope of agglomeration economies.