Tech Firm Births and Agglomeration Economies: (Un)Related Variety, Specialization, and Spatial Externalities

Keywords: Firm births, Tech industry, Agglomeration economies, Specialization, Related variety, Spatial externalities
Session Type: Virtual Paper Abstract
Day: Sunday
Session Start / End Time: 2/27/2022 05:20 PM (Eastern Time (US & Canada)) - 2/27/2022 06:40 PM (Eastern Time (US & Canada))
Room: Virtual 76

Abstract

This paper examines the multi-scalar effects of different types of agglomeration economies, namely, specialization, related variety, unrelated variety, and urbanization economies, on tech firm births in Salt Lake County, Utah, US. We find that these agglomeration economies affect tech firm births simultaneously, but their spatial externalities differ across various scales. Specialization and related variety operate at all scales including neighborhood scale while urbanization economies only work at city-wide scale. Unrelated variety does not affect tech firm births at all scales. Moreover, specialization externalities appear more pronounced at neighborhood scale and its spatial scope is larger than that of related variety. These findings partially explain the recent trend of multiscale clusters of the tech industry and suggest that spatial externalities of agglomeration economies should be understood at different types with a multi-scalar framework. This should be stressed by policymakers and urban planners to maintain sustainable development and secure urban success. These findings also imply that distinguishing related and unrelated variety is necessary at neighborhood scale and should not be ignored in local development planning.