51st Congress of the European Regional Science Association: "New Challenges for European Regions and Urban Areas in a Globalised World", 30 August - 3 September 2011, Barcelona, Spain
Industries have varying abilities to benefit from externalities associated with geographical concentration, and are also likely to suffer in different degrees from crowding costs. This makes industries differ in their concentration process. We hypothesize that firms with low education levels (low tech) tend to be concentrated in areas with low urban costs and small populations, and firms with high education levels (high tech) to be concentrated in areas with high urban costs and large populations. This is shown to be true with Finnish regional-industry data.