Explaining the Demand for Producer Services: Is Cost‐driven Externalization the Major Factor?

Abstract

Producer services employment has grown rapidly within advanced economies in recent years. The bases of demand related to this growth are not well understood by regional scientists. A common view is that this growth is largely attributable to cost‐driven factors and vertical disintegration processes on the part of producer service users. This paper demonstrates that cost‐driven externalization is not the most important force underlying growth in demand for producer services. The need for specialized knowledge is by far the most important factor behind producer services demand, combined with a variety of other cost, quasi‐cost, and non‐cost‐driven forces.

Perceived spatial agglomeration effects and hotel location choice

“…Thus, these four main perceived spatial agglomeration effects determined whether a hotel will locate in the core or periphery of the Metropolis. This, therefore, confirms the assertion by the New Economic Geography that underpinned this study which postulates that external economies of scale (spatial agglomeration effects) determine the choice of location of firms (Bathelt & Hecht, 1990;Beyers & Lindahl, 1996;Scott, 1988Scott, , 1993Sommers & Carlson, 2000;Yang, 2004). However, it is the demand-heightened spatial agglomeration effects that significantly determined the location of hotels in the Metropolis.…”

“…As indicated by the study, over half of the variation in hotel location was explained by perceived spatial agglomeration effects. This finding is consistent with the New Economic Geography theory which stipulates that economies of scale tend to determine the location choice of firms (Beyers & Lindahl, 1996;Bull, 1994;Sommers & Carlson, 2000;Yang, 2004). This theory contests that firms will choose to locate closer to other firms in the same industry in order to enjoy spatial agglomeration effects (economies of scale).…”

“…The New Economic Geography argues that the substantial changes that occur within the economic environments of firms have increased the importance of flexibility and encouraged reliance on external rather than internal economies of scale (Bathelt & Hecht, 1990;Beyers & Lindahl, 1996;Markusen, Hall, & Glasmeier, 1986;Poire & Sabel, 1984;Scott, 1988Scott, , 1993Sommers & Carlson, 2000;Yang, 2004). This theory contests that the issue of industrial location is seen as part of the broader question of constructing an optimal relationship between a firm's customers and suppliers.…”

On the Relationship between Innovation and Wage Inequality: New Evidence fromCanadian Cities

“…9 To address this issue, panel (A) in Table 5 introduces a new set of results using an alternative definition of innovation based on KIBS. The role played by producer services-and KIBS in particular-in facilitating the procurement and exchange of knowledge and information crucial to the process of innovation has long been recognized (Beyers and Lindahl 1996;Daniels and Bryson 2002;Wood 2006). One of the advantages of using KIBS as a proxy for innovation, as Lee (2011) argues, is that it provides a broader definition encompassing economic activities that may be involved in service innovation but are not patented.…”

Coefficient stability and structural change in the Spanish economy

“…2 Analysis of technological change usually requires, besides deflation, the use of total coefficients since what is relevant is the study of the changes in the necessities of used inputs and not so much their domestic or imported origin. The works that have been published on the topic for the US economy are diverse and well known: Carter (1970), Vaccara (1970), Blair and Wyckoff (1989) or Beyers (2001).…”