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IFS/STICERD/UCL Development Work in Progress Seminar

Consumer Search and Firm Location: Evidence from the Garment Sector in Uganda

Anna Vitali (UCL)

Thursday 24 March 2022 12:30 - 14:00

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About this event

In low-income cities economic activity is spatially concentrated, with firms in the same sector operating next to one another in informal clusters. Typical explanations for firm agglomeration relate to positive production externalities that arise when businesses operate close to one another. This paper proposes an additional mechanism, namely lower search costs faced by imperfectly informed consumers who shop in dense locations. Using data from garment firms and their customers in Kampala, Uganda, I document empirical facts that support this mechanism. I then propose a model of consumer search and firm location that allows quantifying the role of production and search externalities on firm location, productivity and consumer welfare. I use counterfactual scenarios to compare the potential impacts of different types of place-based policies aimed of decongesting crowded city centres in low-income countries.

This seminar series is jointly organized by the IFS, STICERD, and UCL.

IFS/STICERD/UCL Development Economics Work In Progress seminars are held on Thursdays in term time at 10:00-14:00, at the IFS, unless specified otherwise.

Seminar organisers: Oriana Bandiera (STICERD, LSE), Imran Rasul (UCL), Britta Augsburg (IFS) and Jonathan Weigel (LSE).

For further information please contact Lubala Chibwe, either by email: l.chibwe@lse.ac.uk.

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