Firm location, interaction, and local characteristics: A case study for Madrid’s electronics sector

Abstract

We use geo-referenced establishment data to estimate parameters of a Gibbs model. The statistical model is used to decompose the conditional intensity of the spatial point process into trend and interaction components. The trend captures covariates related to firms’ costs, accessibility to public transport infrastructures, to technical universities and to cultural and recreational facilities. The ability to specify a Geyer interaction component captures the existence of additional spillovers providing a deeper insight into inter-establishment spatial dynamics. The results challenge some of the outcomes of the inter-urban industrial location literature, confirming that spatial aggregation compromises results in studies of business location. Firms’ location decisions are dominated by site costs, with transportation costs being much less of a consideration; universities geographical knowledge spillovers are confirmed for large establishments; and amenities are unlikely to be important location factors.