From Sectoral to Functional Urban Specialization

Gilles Duranton and Diego Puga

No 9112, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Striking evidence is presented of a previously unremarked transformation of urban structure from mainly sectoral to mainly functional specialization. We offer an explanation showing that this transformation is inextricably interrelated with changes in firms' organization. A greater variety of business services for headquarters and of sector-specific intermediates for production plants within a city reduces costs, while congestion increases with city size. A fall in the costs of remote management leads to a transformation of the equilibrium urban and industrial structure. Cities shift from specializing by sector -- with integrated headquarters and plants -- to specializing mainly by function -- with headquarters and business services clustered in larger cities, and plants clustered in smaller cities.

JEL-codes: L23 R30 (search for similar items in EconPapers)
Date: 2002-08
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published as Duranton, Gilles and Diego Puga. "From Sectoral To Functional Urban Specialisation," Journal of Urban Economics, 2005, v57(2,Mar), 343-370.

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Related works:
Journal Article: From sectoral to functional urban specialisation (2005)
Working Paper: From Sectoral To Functional Urban Specialisation (2001)
Working Paper: From Sectoral to Functional Urban Specialization (2001)
Working Paper: From sectoral to functional urban specialisation (2001)
Working Paper: From sectoral to functional urban specialisation (2001)
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