Geographical agglomeration of productive units is expected to affect positively
cooperation in "multiple winners" games in which costs from increased neighbour competition are not
too high. Small-medium firm export activity is a typical game with these features. Economies of
scale in the provision of export services and informal face-to face exchanges of information about
export markets may in fact facilitate participation to export activity without threatening
potential profits due to productive capacity constraints and the large scale of the market. The
current paper carries an empirical test and finds that geographical agglomeration of small-medium
firms in a delimited area significantly affects their export intensity and their probability of
becoming exporters. The effect is stronger far exports towards non EU markets and is negatively
related to firm size. The significance of geographical agglomeration persists in spite of all
controls included in the estimate which show how the dependent variable is also (positively)
affected by export subsidies, formal export cooperation among firms, size and age. Paper results
suggest that geographical agglomeration, by shifting firms from domestic to foreign markets, may
then be - if technological benefits from more competition are relatively higher on foreign markets
- an important engine for endogenous growth in a downsized system, such as Italy, with a strong
specialisation in Traditional and Specialised sectors.
