Greenstone, Michael, Richard Hornbeck, and Enrico Moretti (2010) examine agglomeration spillovers by analyzing the impact of a large manufacturing plant opening on the total factor productivity (TFP) of existing plants in the same county. They compare incumbent plants in the county where the new plant was located (the "winning county") with those in the county that narrowly lost the competition (the "losing county"). Incumbent plants in both counties had similar TFP trends before the plant opening. Five years after the opening, TFP in winning counties was 12% higher than in losing counties, indicating significant productivity spillovers. This effect was larger for plants sharing labor and technology pools with the new plant. The study also found evidence of increased skill-adjusted labor costs in winning counties, suggesting that the overall effect on profits is smaller than the direct productivity gain. The research highlights the importance of agglomeration spillovers in economic development and the role of local government subsidies in attracting new plants. The findings support the idea that agglomeration spillovers can lead to productivity gains and that local governments may benefit from efficient matching of plants with locations. The study uses a unique dataset and identification strategy based on the location rankings of profit-maximizing firms to isolate the effects of plant openings on TFP. The results provide evidence of significant productivity spillovers and suggest that agglomeration can enhance productivity through labor, technology, and knowledge spillovers. The study also explores the mechanisms behind these spillovers, finding that they are more pronounced for firms with economic linkages to the new plant. The research underscores the importance of understanding agglomeration effects in economic policy and development.Greenstone, Michael, Richard Hornbeck, and Enrico Moretti (2010) examine agglomeration spillovers by analyzing the impact of a large manufacturing plant opening on the total factor productivity (TFP) of existing plants in the same county. They compare incumbent plants in the county where the new plant was located (the "winning county") with those in the county that narrowly lost the competition (the "losing county"). Incumbent plants in both counties had similar TFP trends before the plant opening. Five years after the opening, TFP in winning counties was 12% higher than in losing counties, indicating significant productivity spillovers. This effect was larger for plants sharing labor and technology pools with the new plant. The study also found evidence of increased skill-adjusted labor costs in winning counties, suggesting that the overall effect on profits is smaller than the direct productivity gain. The research highlights the importance of agglomeration spillovers in economic development and the role of local government subsidies in attracting new plants. The findings support the idea that agglomeration spillovers can lead to productivity gains and that local governments may benefit from efficient matching of plants with locations. The study uses a unique dataset and identification strategy based on the location rankings of profit-maximizing firms to isolate the effects of plant openings on TFP. The results provide evidence of significant productivity spillovers and suggest that agglomeration can enhance productivity through labor, technology, and knowledge spillovers. The study also explores the mechanisms behind these spillovers, finding that they are more pronounced for firms with economic linkages to the new plant. The research underscores the importance of understanding agglomeration effects in economic policy and development.