On the Economics of Science Parks

36 Pages Posted: 26 Feb 2019 Last revised: 1 Mar 2019

See all articles by Wen-Jung Liang

Wen-Jung Liang

National Dong Hwa University

Chao-Cheng Mai

Academia Sinica

Jacques-François Thisse

Catholic University of Louvain (UCL); Centre for Economic Policy Research (CEPR)

Ping Wang

Washington University in St. Louis - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2019

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.

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Suggested Citation

Liang, Wen-Jung and Mai, Chao-Cheng and Thisse, Jacques-François and Wang, Ping, On the Economics of Science Parks (February 2019). NBER Working Paper No. w25595. Available at SSRN: https://ssrn.com/abstract=3341255

Wen-Jung Liang (Contact Author)

National Dong Hwa University

Chao-Cheng Mai

Academia Sinica ( email )

Nankang
Taipei, 11529
Taiwan

Jacques-François Thisse

Catholic University of Louvain (UCL) ( email )

Place des Doyens 1
Louvain-la-Neuve, 1348
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Ping Wang

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
St. Louis, MO 63130
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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