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Plants in Space


Time: 10:00 am - 11:30 am, Oct. 8th, 2021

Platform: Zoom

Speaker: Ezra Oberfield

(Princeton University)

Link: https://us06web.zoom.us/j/83034958277?pwd=emkyd0NTQVhiR2xKbGpUZVNnekQwZz09

Meeting ID: 830 3495 8277

Passcode: inse



We study the number, size, and location of a firm's plants. The firm's decision balances the benefit of delivering goods and services to customers using multiple plants with the cost of setting up and managing these plants, and the potential for cannibalization that arises as their number increases. Modeling the decisions of heterogeneous firms in an economy with a vast number of widely distinct locations is complex because it involves a large combinatorial problem. Using insights from discrete geometry, we study a tractable limit case of this problem in which these forces operate at a local level. Our analysis delivers clear predictions on sorting across space. Productive firms place more plants in dense locations that exhibit high rents compared with less productive firms, and place fewer plants in markets with low density and low rents. Controlling for the number of plants, productive firms also operate larger plants than those operated by less productive firms in locations where both are present. We present evidence consistent with these and several other predictions using U.S. establishment-level panel data.




Professor Ezra Oberfield is Associate Professor of Economics at Princeton University. His research interests lie in the areas of macroeconomics, firm dynamics, and growth. His recent work has focused on firm-to-firm production networks, the division of income between capital and labor, and the diffusion of knowledge. His research articles are published in top journals such as Econometrica, Quarterly Journal of Economics and American Economic Review. Currently on the faculty of Princeton University, Professor Oberfield previously served as an economist at the Federal Reserve Bank of Chicago. He is a Faculty Research Fellow at the National Bureau of Economic Research and a CESifo research network affiliate. Professor Oberfield received a Ph.D. in economics from the University of Chicago in 2010.