Recent concepts as megaregions and polycentric urban regions emphasize that external economies are not confined to a single urban core, but shared among a collection of close-by and linked cities. However, empirical analyses of agglomeration and agglomeration externalities so-far neglects the multicentric spatial organization of agglomeration and the possibility of â€˜sharingâ€™ or â€˜borrowingâ€™ of size between cities. This paper takes up this empirical challenge by analyzing how different spatial structures, in particular the monocentricity â€“ polycentricity dimension, affect the economic performance of U.S. metropolitan areas. OLS and 2SLS models explaining labor productivity show that spatial structure matters. Polycentricity is associated with higher labor productivity. This appears to justify suggestions that, compared to relatively monocentric metropolitan areas, agglomeration diseconomies remain relatively limited in the more polycentric metropolitan areas, while agglomeration externalities are indeed to some extent shared among the cities in such an area. However, it was also found that a network of geographically proximate smaller cities cannot provide a substitute for the urbanization externalities of a single large city.
To pull this apart a little, it’s an investigation of the extent to which cities in a polycentric metropolitan area can “borrow” size from neighbors. According to the authors, it does seem that in polycentric regions, small cities can enjoy some of the labour productivity gains from a large market without having all of the disadvantages of a single large city (including high costs and congestion). But the polycentric network can’t fully take advantage of size in the way that a single metropolitan area can.
Anyway, I think that “borrowing size” is a nice way to think about economic development prospects for struggling cities. I typically talk about this in terms of using improved transportation and communication connections to “leverage up” a city’s resources. Put simply, a well-connected regional market can act like one big metropolitan market, which has big economic advantages.