Specialization, Intercity Trade, and Urban Structure
Specialization, Intercity Trade, and Urban Structure
This chapter examines the consequences of urban specialization and diversification for urban structure and intercity trade. It first reviews the empirical evidence on urban specialization and diversification, including the results of Black and Henderson (2003), before discussing the simple economics of urban specialization. In particular, it considers the interrelationships between city geometry, productivity, and city size as well as equilibrium in a system of fully autarkic cities versus partly autarkic cities. The chapter proceeds by analyzing urban structure when intermediates and final goods are traded among cities, the effect of shipping costs on geography, and labor market frictions in the presence of Krugman diversification. Finally, it highlights some lessons that can be derived from the empirics of urban specialization and diversification in relation to intercity trade.
Keywords: urban specialization, diversification, urban structure, intercity trade, economics, city geometry, productivity, city size, geography, labor market frictions
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