Research Summary
Research Summary
Knowledge Spillovers and Growth
Description
Professor King and colleagues investigate the role of knowledge spillovers and externalities in the dramatic disagglomeration and growth of the advertising agency industry following World War II. High demand, low wages, and externalities associated with clusters of related industries explain the dispersion of advertising agency employment across states, but other factors affected the industry growth rates within states. Consistent with Porter's (1990) cluster theory, growth increased with buyer cluster size. In accord with Jacobs (1969) and Porter (1990) but contrary to Marshall-Arrow-Romer, competition, but not specialization, enhanced growth. Diversity had no effect on growth. Despite improvements in telecommunications and transportation reducing effective distances, location still matters.