The effect of agglomeration economies and geography on the survival of accommodation businesses in Sicily

The study explores the geographical pattern of the accommodation industry in the Italian insular region ofSicily, focusing on the determinants of the risk of market exit. We adopt a standard framework of businesssurvival analysis where agglomeration economies play an important role. We then extend the analysis byconsidering the role of geography to explore whether the risk of market exit depends on nearness todesirable amenities. The geography is here measured by the distance from the coast and the altitude ofthe place where the firm is located. When we look at the entire population of accommodation firms thatstarted between 2010 and 2014, we find evidence that the risk of failure increases for those which areover 2 km from the coast.