| China has experienced an amazingly fast urbanization process in recent years. The urbanization rate has reached46.6%in2009, which is much higher than the year2000, and China has become one of the fastest urbanization countries in the world. In the textbook of Urban Economics written by O’Sullivan, he describes the reason why cities exist by assuming a society without any cities, then comparative advantage makes trade between regions advantageous, and the interregional trade causes market cities. Internal scale economies in production allow factories to produce goods more efficiently than individuals, and the production of goods in factories causes the development of factory town. Finally, it is agglomeration economies that make firms cluster in cities, and this clustering makes large cities arise. Agglomeration economies are among the most important and heated topics in urban theories.In the city, the firm’s productivity will be affected by both externalities of other firms within industry and firms in other industries. We call such two kinds of externalities as Marshall externalities and Jacobs externalities respectively. Marshall (1920) argues that firms in the same industry by locating close to each other can share the labor market, then the worker will reduce the risk of unemployment, and both the worker and the employers will reduce their searching cost in labor market; they also can share input factor market and consumers, which will reduce firm’s marginal cost; In the same time, there are also knowledge spillover between those firms and workers in the same industry. However, Jacobs (1969) stresses the importance of urban diversity instead of urban specialization. She argues that a diverse environment can foster cross-fertilization of ideas. For instance, she notes that New York’s brassiere industry evolved not from the lingerie industry but from dressmakers’innovations. Therefore the externalities between firms in different industries are also called as Jacobs externalities. There is no consensus in urban literature on whether it is Marshall externalities or Jacobs externalities that promote the firm’s productivity. In our paper, we want to answer this question in terms of firm life circle:From firms’ birth to maturity, will the firm benefit from different types of agglomeration economies? Are the new firms more likely born in a diverse city? Do those "Relocation" firms migrate from a lower specialization city to a higher one? What is the mechanism behind this phenomenon? Is it just because the firm’s innovation will benefit from different types of agglomeration economies at different stages of firm life cycle? Are these young firms’innovation more likely affected by urbanization economy? Are the older ones more likely to benefit from localization economy? On the other hand, will the entrepreneurship in a city really promote the urban growth? Finally, if there are two types of industry at different levels of aggregation economy within a city, what does the equilibrium distribution of the city look like? Will the higher agglomeration company occupy the city center?To answer above questions, our paper links the agglomeration economies which are represented by different types of industry structure to new firm births and innovation productivity in terms of firm life circle. We try to find out the relationship of firm life circle with agglomeration economy, the mechanism of firm’s innovation and agglomeration economy, and finally empirically to check whether entrepreneurship promotes city growth or not. In the last part of the paper, we set up a nonmonocentric model with co-agglomeration in the city by introducing two types of firms to investigate how the co-agglomeration economy level affects the land use patterns of the city in spatial equilibrium.Chapter1is the introduction. We provide related literatures on agglomeration economy, entrepreneurship which focus on new firm birth and firm’s innovation, and the relationship between entrepreneurship and city growth. The theoretical background of the paper is described in this part.In Chapter2, we study the relationship of firm’s life cycle and agglomeration economy. By employing the micro level data of manufacturing firms from1998to2007, we find that enterprises in different stages of the life cycle will gather in different industrial structure cities.1) Newly-born firms or young firms are more likely to locate in a diverse city. Because these new-birth firms or young enterprises are confronted with uncertainties and risks related to both their product technology and human capital, a diverse environment will help them to reduce those various risks. Fu et al (2009) stress that the city diversification can reduce the city’s unemployment rate; Duranton and Puga (2001) believes that young enterprises in the early stage of innovation product are in the process of searching for the most innovative way. A diversified industrial structure is conducive to such a search and learning process, and also will reduce the risk of failure about firm’s innovation. Second, there is more knowledge spillover in diverse cities. The more diverse a city is, the more opportunities new enterprises have in the city to communicate with neighborhoods.2) If relocated, the mature business will move from a city with lower industry specialization to one with a higher degree of specialization. As firms grow mature, their tolerance of risk will be higher. What they need most is to be professional and more technical. The function of a diverse city of "protection" and "information and resource sharing" are gradually weakened. In addition, a variety of city also bring traffic and friction problems which bring higher costs. Diverse cities are no longer the optimal choice of these mature enterprises.3) At city-sic2level, firm’s average age will be higher if the city is a lower diverse but higher specialize cities. That is, young firms are more likely located in diverse cites and mature firms prefer the specialized one.We explore the mechanism why firms locate in cities with different industrial structure at different stages of their life cycle in Chapter3. Duranton and Puga (2001) establish a theoretical model to link the enterprises location choice with the agglomeration economies. They find that the mechanism behind it is "innovation" In this paper, we employ the Chinese manufacturing data, and divide them into different subsamples by quintiles of firm’s age. Empirical results show that newly-born or young firms’innovation is more likely to benefit from Marshall externalities, and as the firm grow older, Jacobs externalities will begin to work, the mature firm’s innovation is more likely to benefit from industrial specialization. It should be noted that the relationship between enterprise innovation output and the agglomeration economy are showing a "secondary" characteristics, namely, Marshall external economies will begin to weaken as the enterprises in their senior stage(age over16), while Jacobs externalities begin to increase again.Chapter4is to study the relationship between entrepreneurship and city growth by using China’s urban employment data. First, we find that entrepreneurship contributes to urban economic and employment growth, this result is significant for both entrepreneurship related to firm’s births and entrepreneurship related to firm’s innovation; Second, we further explore the factors which affect the distribution of entrepreneurship according to Glaeser (2010). We find that government entrepreneurship is positive but not significant, and industry diversification significantly promotes a city’s entrepreneurship, and the impact of industry diversification is significantly positive.Chapter5gives the distribution of China’s urban entrepreneurship and industrial structure. Using the Chinese manufacturing-sector data, we find three characteristics of the distribution of entrepreneurship and agglomeration economies. First, the specialization index will be higher in cities where the natural resources of the city are relatively higher, such as Panzhihua, Daxing’anling etc. Marshall (1920) points out that one of the important causes of industrial agglomeration is the cost savings. China’s manufacturing industry, in particular, more heavily rely on raw materials which conduct them to choose the location nearby, therefore they can fully enjoy Marshall externalities; Second, after comparing the "entrepreneurial" cities and "innovative"city, we find that entrepreneurship will be higher in a diverse environment. Finally, we find that both entrepreneurship and innovation city have a significant geographical feature. We see that the new enterprises are most concentrated in Shandong province, and the new product is particularly concentrated in Sichuan province. By describing those basic statistics above, we give some policy implications for Chinese government in the development of cities.Finally, in Chapter6, we establish a theoretical model to study the relationship between co-agglomeration economies and urban land use patterns. Co-agglomeration is an important topic in urban economics. However, few theoretical models address it in recent years. We construct a nonmonocentric model with two industries, which allow us to analyze co-agglomeration between industries. In this paper, first, we prove that there exits an equilibrium for the two-industry city in a nonmonocentric model settings. We find that a city in the case of the coexistence of the two industries can exist in equilibrium just only because of the cross-industry agglomeration economies between the two industries. Second, we simulate to obtain land use patterns in the city equilibrium. Given two different combination of agglomeration parameters, we study how different types of agglomeration economies affect the city distribution. We find that, if a city has one "high agglomeration economies" firm and one "high production ability" enterprises, the former will located in the center of the city in equilibrium; if a city has an innovative leader enterprise, and enterprises in such an industry will locate in the city center in equilibrium. Our paper sheds some lights on both empirical analysis and government policy on land markets. |
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