Jahrbuch für Regionalwissenschaft

, Volume 33, Issue 2, pp 107–133 | Cite as

Marshall or Jacobs? New insights from an interaction model

  • Jan Kluge
  • Robert LehmannEmail author
Original Paper


The debate on localization and urbanization economies usually neglects interdependencies between the two types of economies. This paper addresses this problem by employing an interaction model using German data covering four different sectors for the years 1998 to 2008. We find that localization and urbanization economies interact negatively in most of the sectors. Furthermore, we study non-linear effects of specialization and diversification. Taking these into account, the signs indicating localization and urbanization economies change at certain thresholds. Our regression analysis shows evidence of localization economies in manufacturing and basic services. Urbanization economies are generally less prevalent in our data.


Localization and urbanization economies Interaction models Regional gross valued added 



We are grateful to Georg Hirte, Marcel Thum and participants of the Brown Bag Seminar presented by the Faculty of Business and Economics at the Dresden University of Technology. We acknowledge very helpful comments from participants of the ERSA 2012 conference in Bratislava and two anonymous referees.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Ifo Institute, Leibniz-Institute for Economic Research at the University of Munich e.V., Branch DresdenUniversity of MunichDresdenGermany

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