TY  - JOUR
AU  - Duranton,Gilles
AU  - Puga,Diego
TI  - From Sectoral to Functional Urban Specialization
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9112
PY  - 2002
Y2  - August 2002
UR  - http://www.nber.org/papers/w9112
L1  - http://www.nber.org/papers/w9112.pdf
N1  - Author contact info:
Gilles Duranton
Department of Economics
University of Toronto
150 St. George Street
Toronto, ON M5S 3G7
CANADA
E-Mail: gilles.duranton@utoronto.ca

Diego Puga
IMDEA
Universidad Carlos III de Madrid, Dep. Economia
28903 Getafe
Spain
Tel: +34916249753
Fax: NA
E-Mail: diego.puga@imdea.org
AB  - Striking evidence is presented of a previously unremarked transformation of urban structure from mainly sectoral to mainly functional specialization.  We offer an explanation showing that this transformation is inextricably interrelated with changes in firms' organization.  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 specializing by sector -- with integrated headquarters and plants -- to specializing mainly by function -- with headquarters and business services clustered in larger cities, and plants clustered in smaller cities.
ER  -