In estimating the production function of firms, problems of endogeneity and self selection exist as a result of firm-specific productivity shocks and entry/exit decisions. Several methods have been proposed to handle these problems, such as those by Olley and Pakes (1996) and Levinsohn and...

The standard approach to studying industrial agglomeration is to construct summary measures of the degree of agglomerationʺ within each industry and to test for significant agglomeration with respect to some appropriate reference measures. But such summary measures often fail to distinguish...