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Nursery Cities: Urban Diversity, Process Innovation, and the Life Cycle of Products
Abstract
This paper develops microfoundations for the role that diversified cities play in fostering innovation. A simple model of process innovation is proposed, where firms learn about their ideal production process by making prototypes. We build around this a dynamic general-equilibrium model, and derive conditions under which diversified and specialized cities coexist. New products are developed in diversified cities, trying processes borrowed from different activities. On finding their ideal process, firms switch to mass production and relocate to specialized cities where production costs are lower. We find strong evidence of this pattern in establishment relocations across French employment areas 1993–1996. (JEL R30, O31, D83)
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Citations
Cited by
Neffke, F., Henning, M., & Boschma, R. (2011) · Economic Geography · doi:10.1111/j.1944-8287.2011.01121.x · Cited by 1,463
THE MAGNITUDE AND CAUSES OF AGGLOMERATION ECONOMIES
Puga, D. (2010) · Journal of Regional Science · doi:10.1111/j.1467-9787.2009.00657.x · Cited by 939
Self-citationThe divergence of human capital levels across cities
Berry, C. R., & Glaeser, E. L. (2005) · Papers in Regional Science · doi:10.1111/j.1435-5957.2005.00047.x · Cited by 692
Glaeser, E. L., & Kerr, W. R. (2009) · Journal of Economics & Management Strategy · doi:10.1111/j.1530-9134.2009.00225.x · Cited by 452
The identification of agglomeration economies
Combes, P.-P., Duranton, G., & Gobillon, L. (2011) · Journal of Economic Geography · doi:10.1093/jeg/lbq038 · Cited by 341
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Metadata
- Authors
- Duranton, G., & Puga, D.
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2001-12-01
- Volume
- 91
- Issue
- 5
- Pages
- 1454-1477
- ISSN
- 0002-8282 (ISSN-L)
- OpenAlex
- W2154629122
- Cited by
- 1,509
- References
- 0
- FWCI
- 51.90
- Type
- journal article
- Language
- en
- Open access
- closed
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