The network dynamics of urban agglomeration

Authors: SAMUEL HEROY*, University of Oxford, Neave O'Clery*, Oxford University, Francois Hulot, University of Oxford, Mariano Beguerisse, University of Oxford
Topics: Economic Geography
Keywords: Networks, industry agglomeration, diversification paths
Session Type: Paper
Day: 4/6/2019
Start / End Time: 9:55 AM / 11:35 AM
Room: Diplomat Room, Omni, West
Presentation File: No File Uploaded

Firms or industries tend to cluster in cities typically to reduce costs to due shipping, searching and matching in the labour market, and to promote knowledge sharing. These are the so-called Marshallian channels underlying urban agglomeration and the success of cities.

Recent studies have estimated the relationship between industry agglomeration, captured via pairwise co-location of industries, and similar pairwise proxies for each of the Marshallian channels, e.g., buyer-seller relationships as a proxy for shared shipping costs and occupational similarity as a proxy for shared labour costs. Each of these industry similarity metrics gives rise to a distinct network, where nodes are industries, and the edges connecting industries are governed by distinct agglomeration channels.

Previous work has sought to estimate the relative contribution of each channel over all industries, and by industry, by using traditional econometric techniques to uncover relationships between the network edges. However, these approaches are based on a localised analysis of inter-industry relations, and do not take into account the global network structure critical to the study of diversification processes. This work seeks to deploy a multiplex network approach to identify groups of co-located industries (node communities) based on their on reliance each different Marshallian channels.

This work has significant practical importance in mapping and predicting the diversification paths of cities as modelled by the network topology. By determining the relevant channel (network slice) that dominates diversification dynamics within industry groupings (communities), we can provide an evidence-based policy tool to aid diversification strategies.

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