From sectoral to functional urban specialisation

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  • 1 January 2001
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      • Published in RePEc
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.

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