City Systems and Industrial Market Structure

Abstract

Industrial geographers are broadening both the scope and scale of analyses in their quest for deeper understanding of industrial formation and evolution. This has led them to link industrial processes at various spatial scales and to revisit well-defined organizational structures, especially city systems. Taking stock of renewed interest, this paper investigates the relationship between urban regional systems and industrial market structure. The paper demonstrates that the U.S. is composed of urban regional systems that vary in density of urban settlement, and argues that dynamic externalities and barriers to market entry and exit play out within these distinct systems to develop regionalized industry market structures that range from competitive to oligopolistic. An empirical analysis identifies these market structures through use of a Hildreth-Houck variable-coefficients model. Elasticity-of-scale estimates are derived for thirteen consumer and producer services industries at the MSA scale, using 1982 and 1992County Business Patterns data. The results reveal a systematic geography of industry structure generally supportive of the hypotheses linking density of urban settlement to industry market structure. Producer services industries in the western U.S. tend toward oligopolistic market structures, while those in the more densely settled midwest and east are more competitive.