Question
Can the text's argument that cities are too large explain how it could have gotten to be too large in the first place? Why? (3)
Can the text's argument that cities are too large explain how it could have gotten to be too large in the first place? Why? (3)
"In the last several decades, there has been a fundamental shift in the specializa- tion of cities. Large cities have become increasingly specialized in managerial func- tions, while smaller cities have become more specialized in production. Duranton and Puga (2005) compute the ratio of managerial workers to production workers for the nation as a whole and for different metropolitan areas. TFor example, in the largest metropolitan areas in 1950, the metropolitan ratio was 10.2 percent higher than the national ratio, indi- cating a slight specialization in managerial functions. At the other extreme, for the smallest areas, the metropolitan ratio was 4.0 percent lower than the national ratio, indicating slight specialization in production.
. By 1990, the ratio for largest cities was 39 percent higher than the na- tional ratio, indicating substantial specialization in managerial functions. At the other extreme, the ratio for the smallest cities was nearly 50 percent lower than the national ratio, indicating a high degree of specialization in production. These changes in spe- cialization were caused by decreases in the cost of managing production facilities from afar. Firms are better equipped to operate multiplant firms from headquarters in large cities where agglomeration economies generate lower production costs. The most im- portant cost reductions have come from innovations in telecommunications, in particu- lar the development of duplicators (photocopiers, fax machines, and e-mail) that have facilitated the rapid transmission of information and reduced the cost of coordination"
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