Working Paper: CEPR ID: DP13568
Authors: Wenjung Liang; Chaocheng Mai; Jacques François Thisse; Ping Wang
Abstract: Science parks play a growing 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 monopolistic 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 strong localized knowledge spillovers, high startup costs, skilled labor abundance, or low commuting costs make intermediate firms more likely to cluster and a science park more likely to form. We also show that the productivity of the final sector is highest when intermediate firms cluster. As the decay penalty, firms' startup and workers' commuting costs become lower, science parks will eventually be fragmented
Keywords: science parks; knowledge spillovers; intermediate inputs; land use; research; development
JEL Codes: D51; L22; O33; R13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Strong localized knowledge spillovers (O36) | clustering of intermediate firms (F12) |
| clustering of intermediate firms (F12) | formation of science park (O36) |
| High startup costs (M13) | clustering of firms (R32) |
| Abundance of skilled labor (J24) | clustering of firms (R32) |
| Low commuting costs (R48) | clustering of firms (R32) |
| clustering of firms (R32) | emergence of science park (O36) |
| Lower commuting costs (R48) | productivity of final sector (E23) |
| Higher skilled labor availability (J24) | productivity of final sector (E23) |