This paper undertakes empirical analysis of the relationship between productivity and transportation-induced agglomeration effects in the megacity region of the Paris Basin. The authors believe this to be the first study in the French context to produce elasticities of urban agglomeration economies for different industry sectors. Furthermore, the measure of agglomeration used by the authors explicitly took account of accessibility to economic mass in terms of driving times. This study is the first attempt to investigate the presence of nonlinearities in the relationship between productivity and agglomeration with French data. The findings indicate that transportation-induced agglomeration effects differ across industry groups and are greater for business services; these findings agree with existing evidence for other countries. The results also suggest considerable nonlinearity in the relationship between productivity and transportation-induced agglomeration effects and imply that the conventional estimation of country-level aggregate elasticities is likely to misrepresent the actual magnitude of any productivity gains from agglomeration.
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