NBER Working Paper No. 10802
Our objective in this paper is to define jurisdictional advantage, the recognition that location is critical to firms' innovative success and that every location has unique assets that are not easily replicated. The purpose is to be normative and policy oriented. Drawing from the well-developed literature on corporate strategy, we consider analogies to cities in their search for competitive advantage. In contrast to the more passive term locational advantage, our use of the term jurisdiction denotes geographically-defined legal and political decision-making authority and coordination. Thus, jurisdictions may be constructed and managed to promote a coherent activity set. We review recent advances in our understanding of patterns of urban specialization and the composition of activities within cities, which suggest strategies that may generate economic growth as well as those strategies to avoid. This paper then considers the role of firms and their responsibility to jurisdictions in light of the net benefits received from place-specific externalities, and concludes by considering the challenges to implementing jurisdictional advantage.