The rise (and fall) of science parks
(2020) , 33 pages
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- Abstract
- Science parks play a growing role in knowledge-based economies by accommodating high-tech firms and providing an environment that fosters location-dependent knowledge spillovers and promote R&D investments by firms. Yet, not much is known about the economic conditions under which such entities may form in equilibrium without government interventions. This paper develops a spatial equilibrium model with a competitive final sector and a monopolistically competitive intermediate sector, which allows us to determine necessary and sufficient conditions for a science park to emerge as an equilibrium outcome. We show that strongly localized knowledge spillovers, skilled labor abundance, and low commuting costs are key drivers for a science park to form. Not only is the productivity of the final sector higher when intermediate firms cluster, but a science park hosts more intermediate firms, more researchers and more production workers, and yields greater worker welfare, compared to a counterfactual flat city. With continual improvements in infrastructure and communication technology that lowers coordination costs, science parks will eventually be fragmented.
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Citations
Kichko, S., Liang, W.-J., Mai, C.-C., Thisse, J.-F., & Wang, P. (2020). The rise (and fall) of science parks (CORE Discussion Papers 2020/15). https://hdl.handle.net/2078.5/98188