The Agglomeration of Bankruptcy∗

  title={The Agglomeration of Bankruptcy∗},
  author={Vladimir Mukharlyamov},
  • Vladimir Mukharlyamov
  • Published 2014
This paper identifies a new channel through which bankrupt firms impose negative externalities on non-bankrupt peers. The bankruptcy and liquidation of a retail chain weakens the economies of agglomeration in any given local area, reducing the attractiveness of retail centers for remaining stores leading to contagion of financial distress. We find that companies with greater geographic exposure to bankrupt retailers are more likely to close stores in affected areas. We further show that the… CONTINUE READING