Rethinking Agglomeration Economies and the Role of the Central City

Abstract

D espite decades of job suburbanization, employment in producer services remains highly concentrated in central cities. In explaining these spatial patterns, theorists have long argued that producer services, and information-intensive industries more generally, remain bound to the central city by agglomeration economies unique to the urban core. Critics dispute this view on two fronts. On one hand, there are those who challenge the traditional notion that the benefits of spatial clustering are confined to the urban core. On the other are those who contend that the importance of spatial proximity and face-to-face interaction has been overstated in determining where producer service establishments locate.Why do producer services cluster in central cities? How significant are spatial proximity and the need for face-to-face interaction in explaining intrametropolitan location? This article investigates these questions via a locational analysis of the public accounting industry in the Chicago and Minneapolis-St. Paul metropolitan regions. Relying on a telephone survey of public accounting offices and interviews with public accounting executives and industry experts, this research seeks to understand the factors that drive location decisions of public accounting offices and explain why public accounting employment clusters in central cities. Additionally, to the extent that spatial proximity to clients, collaborators, suppliers, and subcontractors is important in location decisions, this study seeks to unpack the spatial character or "reach" of agglomeration economies and determine how close is close enough.Although this research focuses on the public accounting industry, findings are useful in understanding the intrametropolitan locational dynamics of other informationintensive industries. Understanding the key locational determinants of such activities, particularly those over which planners and policy makers exercise some control, is essential in guiding local and regional economic development. Additionally, findings will advance our understanding of the economic interdependencies of cities and suburbs and help to determine if agglomeration economies represent a competitive advantage of central cities. Identifying and building on competitive advantages is essential if AbstractThis article investigates the unique locational attributes central cities are purported to have and the importance of agglomeration economies in intrametropolitan site selection via a locational analysis of the public accounting industry in the Chicago and Minneapolis-St. Paul regions. Relying on data from a telephone survey of public accounting offices and interviews with public accounting executives and industry experts, findings suggest that the agglomeration argument has been overstated in explaining the industry's location and that the traditional conception of agglomeration economies as confined to the urban core is spatially restrictive.

Accessibility and agglomeration: A theoretical framework for understanding the connection between transportation modes, agglomeration benefits, and types of businesses

“…Social networks are fostered through all kinds of interpersonal interaction, sometimes extending regionally (as in the case of clients for advanced service firms or business network organizations) as well as locally (Nelson, ). The businesses most likely to benefit from this kind of face‐to‐face communication are those require a lot of face‐to‐face communication and interaction to do business: advanced service firms (e.g., consultants), high‐tech businesses, and educational institutions.…”

The urbanization and suburbanization of the service economy: producer services and specialization in stockholm

“…This may be seen in terms of the milieu of the central business district with high concentrations of 'headquarters operations, banking and finance, and business (or producer) services' (Hutton 2000, p. 286), where clusters and agglomeration effects are identified as important features (Porter 1995;Jansson 2005). Nelson (2005) argues that, although a concentration of producer services in city centres may be a dominant location pattern, this may be the effect of factors other than agglomeration economies. In addition to proximity to clients and workforce, the availability of office space may prove important.…”