Shocks, spillovers and the location of firms

Focusing on the characteristics of destinations, this paper pursues to identify the role of spatial spillovers in driving location choices of firms. With this objective a spatial conditional logit framework is defined, allowing for neighbourhood-related spatial effects. Additionally, a broad indicator of spatial spillovers generated by a given destination is proposed. The model is then applied to empirically capture the behaviour of more than 66000 new manufacturing firms established in 316 municipalities of the Spanish Mediterranean Arc (SMA) between 1998 and 2008. Estimation results show that such spatial effects have a remarkable impact on the location decisions of high-tech companies relative to those of low-tech ones.