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Urban industrial relocation: The theory of edge cities


  • Francesca Medda


  • Peter Nijkamp


  • Piet Rietveld



In recent years urban economists have focused their attention upon a 'newly recognized' phenomenon: edge cities. Such an urban growth pattern, although having its primary roots in the United States, can be an appropriate framework for examining European trends of urban industrial location. The objective of this study is to examine the relocation of firms from dominant industrial areas, for example, urban CBDs, to new locations at the urban outer boundaries. In this context, we develop in this paper a model based upon the theory of monopolistic competition ("Dixit and Stiglitz, 1977") that examines the economic relationships among firms at different locations. Such intra/inter relationships are examined from the point of view of complementarity. Complementarity in our case combines the two notions of firms' interaction with cumulative and reinforcing effects, and of coordination among firms in the local industrial organizations. Our interest in such a notion springs from the necessity to explain the spatial distribution of firms, particularly why firms in their location often choose to cluster. One of the explanations within the literature is that concentration in clusters is due to the need to share common infrastructures. However, this is just one of many possible explanations for this phenomenon. In our model, we will tackle this aspect of firm locations in clusters from the point of view of the elasticity of substitution. On the basis of the model we will formulate a policy framework regarding industrial suburbanization.

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  • Francesca Medda & Peter Nijkamp & Piet Rietveld, 1998. "Urban industrial relocation: The theory of edge cities," ERSA conference papers ersa98p326, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa98p326

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    References listed on IDEAS

    1. Kiminori Matsuyama, 1995. "Complementarities and Cumulative Processes in Models of Monopolistic Competition," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 701-729, June.
    2. Henderson, Vernon & Mitra, Arindam, 1996. "The new urban landscape: Developers and edge cities," Regional Science and Urban Economics, Elsevier, vol. 26(6), pages 613-643, December.
    3. Ottaviano, Gianmarco I. P., 2001. "Monopolistic competition, trade, and endogenous spatial fluctuations," Regional Science and Urban Economics, Elsevier, vol. 31(1), pages 51-77, February.
    4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    5. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    6. Oliver D. Hart, 1985. "Monopolistic Competition in the Spirit of Chamberlin: A General Model," Review of Economic Studies, Oxford University Press, vol. 52(4), pages 529-546.
    7. Krugman, Paul, 1993. "On the number and location of cities," European Economic Review, Elsevier, vol. 37(2-3), pages 293-298, April.
    8. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
    9. repec:hoo:wpaper:e-92-18 is not listed on IDEAS
    10. Paul Krugman & Anthony J. Venables, 1995. "The Seamless World: A Spatial Model of International Specialization," NBER Working Papers 5220, National Bureau of Economic Research, Inc.
    11. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
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    Cited by:

    1. In Hyeock (Ian) Lee & Eunsuk Hong & Shige Makino, 2016. "Location decisions of inward FDI in sub-national regions of a host country: Service versus manufacturing industries," Asia Pacific Journal of Management, Springer, vol. 33(2), pages 343-370, June.
    2. Joris Knoben, 2006. "A Relational Account of the Causes of Spatial Firm Mobility," ERSA conference papers ersa06p1, European Regional Science Association.

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