sercdp0172

Ahlfeldt / Feddersen –From periphery to core 36scope spatial scope of agglomeration effects. We find an elasticity of output with respect to effectivedensity, i.e., market potential, of about 12.5% in our most conservative model. Our results furtherimply an elasticity of productivity with respect to density of 3.8%, which is well within the range ofexisting cross-sectional estimates. The strength of spillovers halves every 30 minutes of travel timeand is near to zero after about 200 minutes. The spillovers we detect are significantly less localizedthan in previous studies that have identified similar spillover effects from within-city variation, butmore localized than those found in the empirical NEG literature with an emphasis on trade cost. Thebenefits HSR has delivered to the peripheral regions operate through knowledge diffusion and labormarket pooling and the effects of improved access to intermediated goods and consumer markets tothe extent that the ease of communication reduces transaction costs, and thus, Marshallian externalities(Marshall, 1920). Our results complement recent evidence suggesting that improved transportlinkages can benefit core regions at the expense of peripheral regions through a trade channel (Faber,2014).