On the Economics of Science Parks

Wen-Jung Liang, Chao-Cheng Mai, Jacques Thisse and Ping Wang

No 25595, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D51 L22 O33 R13 (search for similar items in EconPapers)
Date: 2019-02
New Economics Papers: this item is included in nep-sbm and nep-ure
Note: IO PR
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Citations: View citations in EconPapers (2)

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Working Paper: On the Economics of Science Parks (2019)
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