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Agglomeration Effects and Performance: A Test of the Texas Lodging Industry

Author
Chung, Wilbur; Kalnins, Arturs
Abstract
While competition decreases rents for firms, the presence of competitors may create benefits. Competitors that agglomerate, that are physically proximate, may create externalities—production efficiencies or heightened demand that increases rents. When such externalities exist, then who gains from and who contributes to them? We examine how other competitors’ traits affect performance in Texas’s lodging industry. In rural markets, we find that chain hotels and larger hotels contribute to positive externalities. While expecting those hotels similar to the establishments creating these externalities to gain, we find the opposite. Independent hotels and smaller hotels gain the most. Interestingly, some establishments are harmed.
Date Issued
2001-10-01Subject
competition; agglomeration; externalities; firm heterogeneity
Related DOI:
https://doi.org/10.1002/smj.178Rights
Required Publisher Statement: © Wiley. Final version published as: Chung, W., & Kalnins, A. (2001). Agglomeration effects and performance: A test of the Texas lodging industry. Strategic Management Journal, 22(10), 969-988. doi: 10.1002/smj.178 Reprinted with permission. All rights reserved.
Type
article