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

Gilles Duranton and Diego Puga

CEP Discussion Papers from Centre for Economic Performance, LSE

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 1993û1996.

Keywords: Cities; diversity; specialisation; innovation; learning; life-cycle (search for similar items in EconPapers)
Date: 2000-02
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Nursery Cities: Urban Diversity, Process Innovation, and the Life Cycle of Products (2001)
Working Paper: Nursery Cities: Urban Diversity, Process Innovation, and the Life-Cycle of Products (2000)
Working Paper: Nursery cities: urban diversity, process innovation and the life-cycle of products (2000)
Working Paper: Nursery Cities: Urban diversity, process innovation, and the life-cycle of products (2000)
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