Abstract
If services have a tendency to agglomerate in some places and not in others, does it make sense to attempt to divert them to areas where agglomeration benefits are weak or not present at all? Using a new spatial data set for Canada applied to a stochastic location model [Ellison, G., & Glaeser, E.L. (1997). Geographic concentration in U.S. manufacturing industries: A dartboard approach. Journal of Political Economy, 105, 889–927], we find that services co-locate with other services and with other industries across space. Agglomeration economies are pronounced, and general rather than industry specific. Services appear no less prone to co-agglomeration than manufacturing industries. The implications for government policy incentives are mixed, suggesting caution.
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