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Agglomeration and Congestion in the Economics of Ideas and Technological Change

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  • Norman Sedgley
  • Bruce Elmslie

Abstract

Urban economists have long recognized that space is economically important. Evidence of the importance of urban agglomeration and the offsetting effects of congestion are provided in a number of studies of productivity and wages. Little attention has been paid to this evidence in the economic growth literature. The new growth research focuses on technological change. We extend the production function for new ideas common to this research in a way that allows for congestion and agglomeration in innovation and test the hypothesis that these forces are important in explaining innovation. Strong evidence is found that agglomeration and congestion are important in explaining the vast differences in per capita patent rates across US states. This suggests an important new agenda in linking studies of urban economics with the rapidly advancing field of endogenous growth.

Suggested Citation

  • Norman Sedgley & Bruce Elmslie, 2001. "Agglomeration and Congestion in the Economics of Ideas and Technological Change," American Journal of Economics and Sociology, Wiley Blackwell, vol. 60(1), pages 101-121, January.
    • Handle: RePEc:bla:ajecsc:v:60:y:2001:i:1:p:101-121
    DOI: 10.1111/1536-7150.00056
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    Cited by:

    1. Amezcua, Alejandro & Ratinho, Tiago & Plummer, Lawrence A. & Jayamohan, Parvathi, 2020. "Organizational sponsorship and the economics of place: How regional urbanization and localization shape incubator outcomes," Journal of Business Venturing, Elsevier, vol. 35(4).
    2. Ford, Timothy C. & Rork, Jonathan C., 2010. "Why buy what you can get for free? The effect of foreign direct investment on state patent rates," Journal of Urban Economics, Elsevier, vol. 68(1), pages 72-81, July.
    3. Norman Sedgley & Bruce Elmslie, 2011. "Do We Still Need Cities? Evidence on Rates of Innovation from Count Data Models of Metropolitan Statistical Area Patents," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(1), pages 86-108, January.

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