Urban Productivity: City Size or Industry Size*

This paper analyzes the effect of city size and industry size on urban productivity in the food processing industry. Some formulations suggest productivity is associated with industry size rather than city size. However, when allowance is made for the tendency of food processing to locate near relevant raw materials and for regional dummies, there is no support for industry scale economies. Agglomeration effects, associated with city size, do exist. The central estimates are based on the Chan‐Mountain version of the translog production function. The results provide information on some facets of the appropriate balance between industrial and agricultural production.