Agglomeration in Norwegian Salmon Aquaculture Revisited

Industry clusters are important in many industries, but their importance may vary over time. The benefits of being located in an industry cluster are typically largest in periods of intensive innovation, which often occur in early stages of an industry or after radical innovations. This may have important implications for industry location and regional policies: Companies located outside of an industry cluster are less likely to succeed when agglomeration externalities are important, whereas in more mature industries, staying outside of the cluster may not entail any significant disadvantages. In this paper we investigate the presence of agglomeration externalities for the Norwegian salmon industry. This is an industry where there is increasing evidence that the productivity growth is slowing down. In line with earlier studies, we find evidence of agglomeration externalities in the first part of our dataset covering the period 2012 to 2015. We do, however, observe that these effects disappear in the period 2016 to 2021. This is important as it may influence the factors that should be considered when locating farms, and may reduce the costs associated with awarding licenses based on regional policy considerations.