City Size Distributions As A Consequence of the Growth Process

The size distribution of cities in many countries follows some broadly regular patterns. Any good theory of city size distributions should (i) be able to account for this regularity, but also (ii) rely on a plausible economic mechanism and (iii) be consistent with other fundamental features of cities like the existence of agglomeration economies and crowding costs. Unlike the previous literature, the model proposed here satisfies these three requirements. It views small innovation-driven techno logical shocks as the main engine behind the growth and decline of cities. Cities grow or decline as they win or lose industries following new innovations. Formally, this is achieved by embedding the quality-ladder model of growth developed by Grossman and Helpman in an urban framework.City size distribution, quality-ladder models of growth, agglomeration economies

California Dreamin': The Feeble Case for Cluster Policies

This study examines the case for cluster policy. This case is theoretically ambiguous and empirically very weak.Clusters, cluster policy, localisation economies, local economic development

From cities to productivity and growth in developing countries

This paper reviews the evidence about the effects of urbanisation and cities on productivity and economic growth in developing countries using a consistent theoretical framework. Just like in developed economies, there is strong evidence that cities in developing countries bolster productive efficiency. Regarding whether cities promote self-sustained growth, the evidence is suggestive but ultimately inconclusive. These findings imply that the traditional agenda of aiming to raise within-city efficiency should be continued. Furthermore, reducing the obstacles to the reallocation of factors and activities, and more generally promoting the movement of human capital and goods across cities may have significant positive dynamic effects as well static ones.Cities in developing countries, growth, urbanisation

Communication Externalities in Cities

To identify communication externalities in French cities, we exploit a unique survey recording workplace communication of individual workers. Our hypothesis is that in larger and/or more educated cities, workers should communicate more. In turn, more communication should have a positive effect on individual wages. By estimating both an earnings and a communication equation, we find evidence of communication externalities. Being in a larger and more educated city makes workers communicate more and in turn this has a positive effects on wages. However, only a small fraction of the overall effects of a more educated and larger city on wages percolates through this channel.human capital, cities, communication externalities

Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs

While transport costs have fallen, the empirical evidence also points at rising total trade costs. In a model of industry location with endogenous transaction costs, we show how and under which conditions a decline in transport costs can lead to an increase in the total cost of trade.Transaction costs, trade costs, transport costs, agglomeration, vertically linkedindustries

Exploring the Detailed Location Patterns of UK Manufacturing Industries Using Microgeographic Data

We use a point-pattern methodology to explore the detailed location patterns of UK manufacturing industries. In particular, we consider the location of entrants and exiters vs. continuing establishments, domestic- vs. foreign-owned, large vs. small, and affiliated vs. independent. We also examine co-localisation between vertically linked industries. Our analysis provides a set of new stylised facts and confirmation for others.Localisation, Location patterns, clusters, K-density, spatial statistics

Nursery Cities: Urban Diversity, Process Innovation and the Life-Cycle of Products

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 specialised 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 specialised cities with lower costs. When in equilibrium, this configuration welfare-dominates those with only diversified or only specialised cities. We find strong evidence of this relocation pattern in establishment relocations across French employment areas 1993û1996.Cities, diversity, specialisation, innovation, learning, life-cycle

Nursery Cities: Urban diversity, process innovation, and the life-cycle of products

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 specialised 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 specialised cities where production costs are lower. We find strong evidence of this pattern in establishment relocations across French employment areas 1993-1996.nursery cities; diversity; specialisation; innovation; learning, life-cycle

Diversity and specialisation in cities: Why, where and when does it matter?

Why are some cities specialised and others diversified? What are the advantages and disadvantages of urban specialisation and diversity? To what extent does the structure of cities, and the activities of firms and people in them, change over time? How does the sectoral composition of cities influence their evolution? To answer these and related questions, we first distil some key stylised facts from the empirical literature on cities and the composition of their activities. We then turn to a review of different theories looking at such issues, and study the extent to which these theories contribute to the understanding of the empirical regularities.cities; diversity; specialisation