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Nursery Cities: Urban Diversity, Process Innovation and the Life-Cycle of Products

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TLDR
In this paper, a simple model of process innovation is proposed, where firms learn about their ideal production process by making prototypes and switch to mass-production and relocate to specialised cities with lower costs.
Abstract
A simple model of process innovation is proposed, where firms learn about their ideal production process by making prototypes. We build around this a dynamic general equilibrium model, and derive conditions under which diversified and specialised cities coexist. New products are developed in diversified cities, trying processes borrowed from different activities. On finding their ideal process, firms switch to mass-production and relocate to specialised cities with lower costs. When in equilibrium, this configuration welfare-dominates those with only diversified or only specialised cities. We find strong evidence of this relocation pattern in establishment relocations across French employment areas 1993u1996.

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References
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Book

Principles of Economics

TL;DR: In this article, the authors present a survey of the general relations of demand, supply, and value in terms of land, labour, capital, and industrial organization, with an emphasis on the fertility of land.
Book

The Economy of Cities

Jane Jacobs
TL;DR: In this article, the authors studied the economy of cities and the main social problems that humanity has and the greatest source of creativity, innovation and development opportunities to solve those problems, which is relevant for a number of reasons: first of all, because most of the planet's population is grouped in them.
Posted Content

Growth in Cities

TL;DR: In this paper, the authors used a new data set on the growth of large industries in 170 U.S. cities between 1956 and 1987 and found that local competition and urban variety, but not regional specialization, encourage employment growth in industries.
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Innovation in cities: Science-based diversity, specialization and localized competition

TL;DR: In this article, the authors consider the effect of the composition of economic activity on innovation and test whether the specialization of economic activities within a narrow concentrated set of activities is more conducive to knowledge spillovers or if diversity, by bringing together complementary activities, better promotes innovation.
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