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From sectoral to functional urban specialisation

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  • Gilles Duranton
  • Diego Puga

Abstract

We document and then develop a model explaining and relating changes in firms'' organisation and in urban structure. Sharing of business services by headquarters and of sector-specific intermediates by production plants within a city reduces costs, while congestion increases with city size. A fall in the costs of remote management leads to a shift in urban structure, from a configuration where cities specialise by sector and host integrated headquarters and production plants, to a configuration where cities specialise by function, with headquarters from different sectors and business services clustered in a few large cities and production plants from each sector clustered in smaller separate cities.

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File URL: http://eprints.lse.ac.uk/20101/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 20101.

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Length: 28 pages
Date of creation: Sep 2001
Date of revision:
Handle: RePEc:ehl:lserod:20101

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Web page: http://www.lse.ac.uk/
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Keywords: functional specialisation; cities; business services; headquarters;

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