Intercity Industrial Performance and Public Finance in Moscow Region, 1993-1995--Just a Lot of Company Towns?

Applying a stochastic industrial production function at the aggregate city level for 72 cities in a single Russian region reveals industry in a variety of cities is quite similar in the ability to produce gross industrial output efficiently during the early transition era 1993-95. Weak evidence is found for cities becoming more diverse in industrial performance during the period. Using additional inefficiency impact variables, some evidence was found for a more diversified industrial base and more locally retained profit tax revenue improving efficiency among cities in a given year, suggesting more diversified cities may perform better than a one-company town in the transition era. The hypothesis of an urban agglomeration effect improving efficiency found in the literature was rejected using distance and population density variables.