Abstract
The importance of industry clusters may vary over time. The benefits of being located in an industry cluster is normally largest in innovation intensive periods which often occurs in the initial phase as the inception of an industry. This can be important for industry location and regional policies, as companies located outside of an industry cluster is less likely to succeed when agglomeration externalities are important, while there may be no disadvantages associated with staying outside of the cluster for a more mature industry.
In this paper we investigate the presence of agglomeration externalities for the Norwegian salmon industry using a translog cost function. This is an industry where there is extensive evidence of industry clusters, but with highly dated data. There is increasing evidence that the industry is maturing and productivity growth is slowing down, and larger companies with internal knowledge networks is becoming increasingly important.
We find that there is a structural break in the estimated parameters between 2015 and 2016. As in earlier studies, we find evidence of agglomeration externalities in the first part of our data set. However, these disappears after 2015, changing the considerations that should be made when locating farms as well as the costs associated with awarding licenses based on regional policy considerations.