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Production Economics in Spatial Analysis

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Handbook of Production Economics

Abstract

This chapter summarizes the empirical literature that uses a spatial analysis framework in production economics. This literature takes advantage of the spatial dimension of the data to capture the spillover effects of neighboring production units. In the first three sections, we outline standard spatial extensions of the neoclassical production models aiming to measure knowledge spillovers, the effect of network inputs, and economies of agglomeration. The next four sections outline the literature that on one hand examines returns to scale and productivity growth from both internal and external inputs, and on the other hand summarize the spatial econometric techniques used in frontier and non-frontier analyses of firms’ production. The last section includes a set of final remarks regarding the application of spatial econometric techniques in production analyses.

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Notes

  1. 1.

    The “spatial lag” terminology used in spatial econometrics was originally introduced by Anselin [6].

  2. 2.

    If real wages are proportional to labor productivity, this issue can be also examined using wage functions.

  3. 3.

    The content of this section is highly inspired in Orea and Álvarez [97].

  4. 4.

    This subsection is inspired in Kutlu [80].

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Acknowledgments

This chapter was supported by the Spanish Ministry of Economics, Industry and Competitiveness (Grant MINECO-18-ECO2017-85788-R). The authors would like to thank the two “Salvador de Madariaga” grants obtained from the Spanish Ministry of Science, Innovation and Universities (Grants PRX19/00596 and PRX19/00589). We also wish to acknowledge helpful suggestions from an anonymous reviewer.

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Authors and Affiliations

  1. Oviedo Efficiency Group, Department of Economics, University of Oviedo, Oviedo, Spain

    Luis Orea

  2. Oviedo Efficiency Group, Department of Economics, Universidad Autónoma de Madrid, Madrid, Spain

    Inmaculada C. Álvarez

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  1. Luis Orea
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  2. Inmaculada C. Álvarez
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Correspondence to Luis Orea .

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Editors and Affiliations

  1. Department of Economics, University of Connecticut, Storrs, CT, USA

    Subhash C. Ray

  2. Department of Agricultural and Resource Economics, University of Maryland, College Park, MD, USA

    Robert G. Chambers

  3. Department of Economics, Binghamton University, Binghamton, NY, USA

    Subal C. Kumbhakar

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Orea, L., Álvarez, I.C. (2022). Production Economics in Spatial Analysis. In: Ray, S.C., Chambers, R.G., Kumbhakar, S.C. (eds) Handbook of Production Economics. Springer, Singapore. https://doi.org/10.1007/978-981-10-3455-8_35

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