Industrial location has attracted much attention since classical location theories were built, but most of literature focused on location choice at macro scale. However, micro-scale location choice became a troublesome problem due to the reduction of land and the increase of land price. The research employed a unique micro-firm dataset to identify industrial agglomeration areas of service and manufacturing industries in Beijing and then uncovered factors which have impact on micro-scale location choice within urban areas. Importantly, the result further showed difference of location choice between two typical economic sectors--management service and automobile manufacturing in Beijing. The findings are obtained as follows: (1) 102 service and 130 manufacturing agglomeration areas were identified by firm and employment densities. Firms within these two kinds of agglomeration areas accounted for 72.66% and 44% in service and manufacturing industries respectively. Generally, most of large service firms had concentrated into those service clusters, while large manufacturing enterprises used to be located otherwise. Compared with large firms, small and medium-sized manufacturing firms were more inclined to distribute in agglomeration areas. (2) Although the results showed that urbanization economies had significant effect on location choice of both modern service (representing by management service) and manufacturing industry (representing by automobile manufacturing), the influence mechanisms are completely different. The former prefers a diversified local labor market and relatively diversified industrial environment, while the latter needs a complete industry supplying chain. It is only because the automobile industry has a diverse and comprehensive range of auto parts, it seems that automobile manufacturing firms prefer diversified environment. Naturally, upstream and downstream industry chains and specialized labors are key factors for location choice of automobile firms. Even for the service industry, it is not the more diversified the better at the micro scale. (3) Different from existing literature, the results showed that industrial policies had more influence on service than manufacturing industry. It is partly because one of important factors for location of management service is public infrastructure such as subway, on which local governments have enough impact; and partly because, automobile, as an advanced manufacturing industry, is not among the negative list of manufacturing. Besides, enterprise property has significant influence on location choice of both industries.
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This paper develops microfoundations for the role that diversified cities play in fostering innovation. 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 specialized 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 specialized cities where production costs are lower. We find strong evidence of this pattern in establishment relocations across French employment areas 1993-1996.
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Why do firms cluster near one another? We test Marshall's theories of industrial agglomeration by examining which industries locate near one another, or coagglomerate. We construct pairwise coagglomeration indices for US manufacturing industries from the Economic Census. We then relate coagglomeration levels to the degree to which industry pairs share goods, labor, or ideas. To reduce reverse causality, where collocation drives input-output linkages or hiring patterns, we use data from UK industries and from US areas where the two industries are not collocated. All three of Marshall's theories of agglomeration are supported, with input-output linkages particularly important.
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To maintain its relevance for the analysis of economic ex-yuternalities and internalities rendered by locational behaviour andyspatial organisation of firms, the concept of ‘economies ofyagglomeration’ must be amended in two ways. First, its socio-ycultural content must be recognised. Second, the interaction be-ytween agglomerations and other spatial forms, in particulary'global networks of agglomerations', must be taken into account.yIf these two conditions are met, it becomes possible to disconnectyeconomies which are traditionally attributed to agglomeration asya spatial form, from this spatial form and to revisit the signifi-ycance of urbanisation economies for the location and spatialyorganisation of knowledge-based industries like advanced pro-yducer services. The relevance of reconsidering ‘agglomerations inytheir global networks' for the analysis of the economic geographyyof such services is illustrated for information technology con-ysultancy and executive search and selection consultancy firms.