Nikhil R. Kalathil

Manufacturing Strategy & Policy | Supply-Chain & Technology Policy | Economic Development & Dynamism

Latest Publication

Varieties of agglomeration: Disentangling horizontal and vertical agglomeration within the manufacturing sector in the United States

Kalathil, N., Lanahan, L., Feldman, M., & Fuchs, E. R. (2025). Research Policy.

We introduce a novel measure of agglomeration that differentiates between horizontal (co-location with the own/peer industries) and vertical (co-location with suppliers) agglomeration. Using employment and establishment data at the US county level and the six-digit industry level, we demonstrate that industries and regions vary in their degree of vertical versus horizontal agglomeration. Industries with a higher contribution of manufactured goods to overall inputs’ value are correlated with vertical agglomeration while more R&D intensive industries are correlated with horizontal agglomeration. Using the semiconductor industry as an example, we illustrate how heterogeneity in industry-county rates of vertical and horizontal agglomeration might reflect differences in the products that firms operating in different counties manufacture. These industry-level and within-industry differences are not observable with existing agglomeration measures. We present a new theoretical framework for regional and industrial policy interventions.

Read Full Paper

Short-Term Economic Dynamism as a Policy Tool to Address Supply Shortages During Crises

Industrial and Corporate Change, 2023

This paper develops new theory for how states and nations can better leverage firm entry into critical products to address shortages during crisis situations.

Read Full Paper

Working Papers

One Size Does Not Fit All: An Analysis of Agglomeration-Firm Fit on New Manufacturing Firm Performance.

Kalathil, N., Lanahan, L. (2025) Under Review

Firms benefit from their local agglomerations when there is a distinct fit between accessible agglomeration assets and firm needs. Operationally, we sample and identify new manufacturing firms in identical industries that are born in seemingly similar but marginally different agglomerated counties. We define horizontal agglomeration as geographies with greater co-location of own-industry establishments, and vertical agglomeration as geographies with greater co-location of industry suppliers. On average, new manufacturing firms report performance gains in horizontal agglomeration relative to vertical agglomeration. Regions with anchors amplify this effect. Separately, firms operating with downstream production report increased performance when in vertically agglomerated regions. Lastly, new manufacturing firms located away from the industry-dominant agglomeration structure report higher performance. One type of agglomeration does not fit all new manufacturing firms.