Plant Size and Clustering of Manufacturing Activity

Although a growing number of studies emphasize the advantages small firms gain by co‐locating in space, there is little empirical work that directly examines clustering trends by firm size. This paper presents an empirical analysis of the isolated effects of size on clustering patterns of producers in a major manufacturing state in the southeast United States. Recent developments in point process modeling allow us to control for the critical fact that economic activity is, in general, concentrated in space. Our findings suggest that the relationship between establishment size and clustering in North Carolina is roughly characterized by an inverted u‐shape, that is, clustering increases up to some size threshold and then decreases again.