Several papers illustrate directly that firms are willing to pay higher rents in order to be locatedin an agglomerated area. Arzaghi and Henderson (2008) explore advertising agencies in Manhattan,and find that firms would be willing to pay over two standard deviations higher rent to gain accessto immediate neighbors. Similarly, Pashigian and Gould (1998) show that anchor stores, whichincrease customer traffic in shopping malls, receive a per foot rent subsidy of at least 72 percentrelative to other stores. In other words, while non-anchor stores occupy 23.4% of total square footagein shopping malls, they pay 78.3% of total rental fees. This evidence further illustrates the significantvalue of spillover effects to firms.