{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,10,2]],"date-time":"2026-10-02T17:26:28Z","timestamp":1790961988981,"version":"4.1.0"},"reference-count":62,"publisher":"The Econometric Society","issue":"6","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["ECTA"],"abstract":"<jats:p>This paper shows that matching frictions and a thick market externality in firm\u2010to\u2010firm trade shape the agglomeration of economic activity. Using panel data of firm\u2010to\u2010firm trade in Japan, I demonstrate that firms gradually match with alternative suppliers following an unanticipated supplier bankruptcy, and that the rate of rematching increases in the geographic density of alternative suppliers. Motivated by these empirical findings, I develop a general equilibrium model of firm\u2010to\u2010firm matching in input trade across space. The model reveals that the thick market externality gives rise to an agglomeration externality affecting regional production and welfare. Using the calibrated model to the reduced\u2010form patterns of firm\u2010to\u2010firm matching, I estimate that the elasticity of a region's real wage with respect to population density due to the thick market externality is approximately 0.02. This finding highlights the substantial impact of the thick market externality on the overall agglomeration benefit.<\/jats:p>","DOI":"10.3982\/ecta19697","type":"journal-article","created":{"date-parts":[[2024,11,19]],"date-time":"2024-11-19T14:21:59Z","timestamp":1732026119000},"page":"1869-1905","source":"Crossref","is-referenced-by-count":16,"title":["Matching and Agglomeration: Theory and Evidence From Japanese Firm\u2010to\u2010Firm Trade"],"prefix":"10.3982","volume":"92","author":[{"given":"Yuhei","family":"Miyauchi","sequence":"first","affiliation":[{"name":"Department of Economics, Boston University"}],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"2359","published-online":{"date-parts":[[2024]]},"reference":[{"key":"ecta200733-bib-0001","doi-asserted-by":"crossref","first-page":"1","DOI":"10.1093\/qje\/qjac038","volume":"138","author":"Abadie","year":"2023","journal-title":"The Quarterly Journal of 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