Urban Functional Specialisation and the Interplay between Firm’s Communication Costs
This paper focuses on the functional specialisation of a system of cities, with particular attention to the role and the formation process of secondary business centers. At the european level, the latters can be identified in the large number of regional capitals, and properly defined as cities hosting both headquarters of multi-location firms and providers of standard non-tradable business services (SBS). I present a theoretical model in which the changes in urban system’s degree of functional specialisation are linked to (i) firms’ organisational choices, since firms decide whether splitting into headquarter and production plant or remaining integrated in a single establishment and to (ii) firms’ location decision with regards to the proximity with the tradable advanced business services providers. I model two types of communication costs, one between headquarters and advanced tradable business services providers (ABS) and one between headquarters and production plants. The interplay between the two types of communication costs is shown to have effects on the transition process from an “integrated” urban system where each city hosts every different functions to a “functionally specialised” urban system where each city is either a primary business center (hosting ABS), a secondary business centers (SBS) or a pure manufacturing city and all this city-types coexist in equilibrium. In particular, I find that maximum functional specialisation of the urban system turns out to be feasible only if firms face a very high share of the total costs represented by their heaquarter spending.
|Date of creation:||Apr 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Piazza Scaravilli, 2, and Strada Maggiore, 45, 40125 Bologna|
Phone: +39 051 209 8019 and 2600
Fax: +39 051 209 8040 and 2664
Web page: http://www.dse.unibo.it
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Audretsch, David B. & Falck, Oliver & Heblich, Stephan, 2011.
"Who’s got the aces up his sleeve? Functional specialization of cities and entrepreneurship,"
Munich Reprints in Economics
20179, University of Munich, Department of Economics.
- David Audretsch & Oliver Falck & Stephan Heblich, 2011. "Who’s got the aces up his sleeve? Functional specialization of cities and entrepreneurship," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 46(3), pages 621-636, June.
- Jean Cavailhes & Carl Gaigne & Takatoshi Tabuchi & Jacques-Francois Thisse, 2006.
"Trade and the structure of cities,"
CIRJE-F-454, CIRJE, Faculty of Economics, University of Tokyo.
- Jean Cavailhes & Carl Gaigne & Jacques-Rrancois Thisse, 2006. "Trade and the structure of cities," KIER Working Papers 623, Kyoto University, Institute of Economic Research.
- Jean Cavailhes & Carl Gaigné & Takatoshi Tabuchi & Jean-François Thisse, 2012. "Trade and the structure of cities," Post-Print hal-01208823, HAL.
- Kristin Aarland & James Davis & J Vernon Henderson & Yukako Ono, 2004.
"Spatial Organization of Firms: The Decision to Split Production and Administration,"
04-03, Center for Economic Studies, U.S. Census Bureau.
- Kristin Aarland & James C. Davis & J. Vernon Henderson & Yukako Ono, 2007. "Spatial organization of firms: the decision to split production and administration," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 480-494, 06.
- Ono, Yukako, 2007. "Market thickness and outsourcing services," Regional Science and Urban Economics, Elsevier, vol. 37(2), pages 220-238, March.
- Henderson, Vernon & Becker, Randy, 2000. "Political Economy of City Sizes and Formation," Journal of Urban Economics, Elsevier, vol. 48(3), pages 453-484, November.
When requesting a correction, please mention this item's handle: RePEc:bol:bodewp:wp877. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dipartimento Scienze Economiche, Universita' di Bologna)
If references are entirely missing, you can add them using this form.