In this thesis, I emphasize the role of spatial linkages as well as market interaction by examining how local technology shocks affect the aggregate economy and how interdependent market entry affects firm-specific choices and welfare. Interdependence means that market-specific choices for one market depend on characteristics from all other markets.</br> In a collection of three research papers, I analyze (i) the characteristics of key regions in the German economy, (ii) the impact of price integration on heterogeneous firms and the aggregate economy, and (iii) the effects of market interdependence, captured by firm-specific technology investments and affecting firmspecific productivity for all destination markets, on firm-specific choices and welfare.