Real Estate Papers

Document Type

Journal Article

Date of this Version

3-2005

Publication Source

Journal of Urban Economics

Volume

57

Issue

2

Start Page

343

Last Page

370

DOI

10.1016/j.jue.2004.12.002

Abstract

Striking evidence is presented of a previously unremarked transformation of urban structure from mainly sectoral to mainly functional specialisation. We offer an explanation showing that this transformation is inextricably interrelated with changes in firms' organisation. 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 specialising by sector—with integrated headquarters and plants—to specialising mainly by function—with headquarters and business services clustered in larger cities, and plants clustered in smaller cities.

Copyright/Permission Statement

© 2005. This manuscript version is made available under the CC-BY-NC-ND 4.0 license.

Comments

At the time of publication, author Gilles Duranton was affiliated with the London School of Economics. Currently (September, 2016), he is a faculty member at the Real Estate Department at the University of Pennsylvania.

Keywords

functional specialisation, cities, headquarters, business services

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Date Posted: 27 November 2017

This document has been peer reviewed.