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From sectoral to functional urban specialisation

Author

Listed:
  • Duranton, Gilles
  • Puga, Diego
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.

Suggested Citation

  • Duranton, Gilles & Puga, Diego, 2001. "From sectoral to functional urban specialisation," LSE Research Online Documents on Economics 20101, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:20101
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    More about this item

    Keywords

    functional specialisation; cities; business services; headquarters;
    All these keywords.

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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