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The rise (and fall) of science parks

Sergey Kichko, Wen-Jung, Liang, Chao-Cheng, Mai and Jacques Thisse
Additional contact information
Wen-Jung, Liang: National Dong Hwa University
Chao-Cheng, Mai: Academia Sinica and Tamkang University

No 2020015, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Science parks play a growing role in knowledge-based economies by accommodating high-tech firms and providing an environment that fosters location-dependent knowledge spillovers and promote R&D investments by firms. Yet, not much is known about the economic conditions under which such entities may form in equilibrium without government interventions. This paper develops a spatial equilibrium model with a competitive final sector and a monopolistically competitive intermediate sector, which allows us to determine necessary and sufficient conditions for a science park to emerge as an equilibrium outcome. We show that strongly localized knowledge spillovers, skilled labor abundance, and low commuting costs are key drivers for a science park to form. Not only is the productivity of the final sector higher when intermediate firms cluster, but a science park hosts more intermediate firms, more researchers and more production workers, and yields greater worker welfare, compared to a counterfactual flat city. With continual improvements in infrastructure and communication technology that lowers coordination costs, science parks will eventually be fragmented.

Keywords: science park; knowledge spillovers; intermadiate firm clustering; land use; worker commuting; R&D (search for similar items in EconPapers)
JEL-codes: D51 L22 O33 R13 (search for similar items in EconPapers)
Date: 2020-02-11
New Economics Papers: this item is included in nep-cse, nep-geo, nep-ict, nep-tid and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2020015

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