The Formation of Urban Centers under R\&D and Spillover Externalities
This paper proposes a model of urban agglomeration in conjunction with imperfect competition and endogenous product R\&D of firms. The quality of differentiated manufacturing goods is a result of R\&D services provided by research firms. Sectoral interactions are subject to spatially dependent transaction costs and (knowledge) spillover externalities. The paper analyzes the existence of fundamental city patterns with respect to R\&D intensity and the degree of localization in knowledge production. The model features three equilibrium formations: a monocentric, a mixed, and a perfectly integrated pattern, whereas the R\&D intensity always increases towards the city center. However, product quality and the corresponding R\&D expenditures of firms are not necessarily increasing with the city size; a result, which also renders decisive implications of local innovation policy.
|Date of creation:||Sep 2009|
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- Marcus Berliant & Robert R Reed & Ping Wang, 2003.
"Knowledge Exchange, Matching, and Agglomeration,"
666156000000000395, UCLA Department of Economics.
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- Marcus Berliant & Robert R. Reed III & Ping Wang, 2000. "Knowledge Exchange, Matching, and Agglomeration," Vanderbilt University Department of Economics Working Papers 0033, Vanderbilt University Department of Economics.
- Marcus Berliant & Robert R. Reed III & Ping Wang, 2004. "Knowledge Exchange, Matching, and Agglomeration," Urban/Regional 0405007, EconWPA, revised 03 Dec 2004.
- Marcus Berliant & Robert R. Reed, III & Ping Wang, 2000. "Knowledge exchange, matching, and agglomeration," Discussion Paper / Institute for Empirical Macroeconomics 135, Federal Reserve Bank of Minneapolis.
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"Industrial Development in Cities,"
Journal of Political Economy,
University of Chicago Press, vol. 103(5), pages 1067-90, October.
- Berliant, Marcus & Peng, Shin-Kun & Wang, Ping, 2002.
"Production Externalities and Urban Configuration,"
Journal of Economic Theory,
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- Marcus Berliant & Shin-Kun Peng & Ping Wang, 2000. "Production Externalities and Urban Configuration," Vanderbilt University Department of Economics Working Papers 0011, Vanderbilt University Department of Economics.
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"The Structure and Evolution of Industrial Clusters: Transactions, Technology and Knowledge Spillovers,"
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