a-small-lab Resources

City Advantage (Cortright, 2007)

How can cities compete in a global/knowledge-driven world?
How can they attract and retain citizens?

Moving from a traditional view of the advantages of cities as producers of goods and services, the competitiveness of cities lies increasingly in the choices they offer to ‘consumers’.
‘Consumption’ here is used in a broad sense, encompassing traditional consumption of commercial goods and services, public goods, activities, and experiences. Many of these are tied to places (cities).

Four Key City Advantages:

(1) Variety:

• Because of their size and range of citizen tastes, cities offer a wider range of consumption options. This implies greater competition , which leads to better quality.
• Well educated people have a greater hunger/appreciation for variety (much consumption is ’skilled consumption’ – requires learning/experience), so they move to cities (often at lower pay-rates than they could demand in other places), making cities more attractive to employers. This cycle can be ’self reinforcing’ – in either direction

Concept: ‘local private goods’ = restaurants, local radio stations, cultural experiences

Concept: “scale economy / indivisibility” = there is a minimum level of potential customers needed to support amenities/services/goods, and because of their size cities can support more of these. Numbers are not ‘almighty’, however, ‘tastes’ are also important – your options will be a function of the preferences of yoru neighbours/community.

Assumption: Variety increases our utility (each customer can more closely match preferences to consumption options). There are arguments to the contrary (focusing on how too much choice overwhelms us and makes us blame ourselves for ‘wrong’ choices – e.g. Schwartz, cited). However, markets work to recitfy this.
Whether or not this assumption is ‘true’, demand for variety is increasing as a function of demographics (more singles, elderly, childless couples, un-married couples, solo-parents, racial/ethnic diversity), rising incomes, and income inequality.

(2) Convenience:

• Density = more things, closer. This enables shorter travel times and lower search costs; areas in which higher income households put a relatively higher value on. This incentivizes such people to live in cities.

• Convenience positively interacts with variety.

Concept: Short travel times (usually due to shorter distances), rather than speed of transport is important in cities.

Concept: Time is money. The cost of consumption includes search, purchase and experience/consumption time. Sometimes these costs can exceed the cost of purchase (e.g. going hiking).

(3) Discovery:

• Cities expose people to more things and help them to discover new opportunities – “it’s easy to stumble on the fun” in cities (Cortright and Coletta, 2004). This leads to rises in quality/demand for quality and thus new industries and growth.

Concept: Our preferences are not fixed, they evolve and change in response (in part) to the things we are exposed to.

Concept: Interdependence of tastes. Consumption involves network externalities (see also, e.g Watts). People often make similar choices to the people that they know, so, exposure to new choices affects preferences.

Concept: Discovery drives innovative entrepreneurs/producers. Large populations = large numbers of people willing to try new things. Demanding consumers = window to market trends. User innovation and interaction with users is important (e.g. von Hippel, 2005, cited). Innovation often emerges from people with passion banding together (e.g. Apple). Specific places/setting are important – e.g. Farmers markets increase variety and discovery opportunities, participant collaboration etc (see p30).

(4) Opportunity:

• There are more jobs in cities, and there are more opportunities to improve or acquire skills. This attracts, in particular, workers (data, p32).
• Further, informal networks developed in dense cities are important for job search – ‘know who’ is easier to develop when there are more chances to meet people face-to-face. ‘Power Couples’ also find it easier to live in cities (easier to find employment for the ‘trailing spouse’, richer social life).

Information Bartering:

Concept:“Double coincidence of wants”: When you have something that someone else wants and they have something you want you can barter. With goods and services, it is hard to meet this condition and it is easier to just exchange cash. Information is, however, different because of its quality of ‘non-rivalry’.

Concept: ‘Non-rivalry’: Use by one person does not dimish its utility for another person.

In order to be able to engage in exchanges of knowledege it is important that the parties speak the same (professional/industry) language and can determine what is valuable to each other. In large cities there are more opportunities for serendipidous encounters, network building etc.

Advice for Cities:

• Recognize consumption (not just production) as important: How does it impact on citizen well being/quality of life?

• Improve variety and quality of public and private goods, service and experiences: This can be done directly (provision of parks, education, public transport etc) and indirectly (by fostering an environment where variety is valued and the convenience of cities is stressed, promoting mixed-use development, supporting accessibility).

• Don’t compete on price: You don’t need to – focus on better and more convenient consumption options.

• Encourage discovery: Facilitate individual discoveries. Keys – business licensing, immigrant entrepreneurs, experiences, variances, local events (street fairs, fesitivals).

• Emphasize distinctiveness: What is different about your city which provides it with a sense of space?

• Resist global and national standards: Don’t subsidize imitation and duplication (franchises, chains, big-box stores). Low priced stores can diminish demand for some products to the point where they are not produced.

• Promote Opportunity: Help people with job/career search, internships, networking events.

Original Text:
Cortright, J. (2007). City advantage. Report for CEOs for Cities.