Forslid, Rikard; Okubo, Toshihiro - In: Regional Science and Urban Economics 46 (2014) C, pp. 42-56
The present paper focuses on spatial sorting as a mechanism behind the well-established fact that there is a central region productivity premium. Using a model of heterogeneous firms that can move between regions, Baldwin and Okubo (2006) show how more productive firms sort themselves to the...