Geographic location and industry dynamics

This dissertation consists of three essays that examine different aspects of the impact of increased competition on geographic location of industries over time. The first essay a joint work with Fabien Tondel) looks at how an increase in foreign competition due to a trade liberalization episode affects spatial distribution of manufacturers and production in an industry. It builds on the work of Melitz (2003) by developing a model of monopolistic competition with heterogeneous firms and two regions (urban and rural). Firms self-select themselves into different regions and export market based on their productivity. We demonstrate that a change in the variable trade cost results in a relocation of firms and production across regions. We find evidence that a decrease in tariffs raised the share of Colombian nonmetropolitan plants and production between 1984 and 1991.;The second essay examines the effect of increased domestic competition due to more entry on the spatial location of an industry. Based on a dynamic model of monopolistic competition with two regions (core and periphery) extending the framework in Gotz (2002), I show that as more firms enter the market, the competition drives inefficient producers to the periphery and eventually out of the industry. Consequently, a U-shaped pattern of industry development in terms of the share of firms in the core should exist from product inception to the end of the shakeout. I find evidence for the presence of such pattern in three U.S. industries with a severe shakeout---automobile tires, DDT, and penicillin.;In my third essay, I further investigate how an increase in competition over time affects industry location by in analyzing a historical dataset of firm location for five U.S. industries (cathode ray tubes, DDT, home and farm freezers, tires, and penicillin). This analysis compares the dynamics in the primary and secondary region of each industry, a well as in the core versus the periphery during the different stages of product evolution. I find that the different regions experienced different patterns of industry development---the shakeout was delayed in the periphery/secondary region for all but one of the products in my study.;Keywords. Geographic Location, Industry Dynamics. Trade Liberalization, Urban Versus Rural. Core Versus Periphery.