Do We Still Need Cities? Evidence on Rates of Innovation from Count Data Models of Metropolitan Statistical Area Patents


  • Norman Sedgley,

    1. Loyola University in Maryland
    Search for more papers by this author
  • Bruce Elmslie

    1. University of New Hampshire
    Search for more papers by this author
    • Norman Sedgley is an Associate Professor in the Department of Economics, Sellinger School of Business and Management at Loyola University in Maryland, Baltimore, MD 21210; His interests are in the areas of growth theory, technological progress, and international trade. He has recently published articles in Economica, the Journal of Housing Economics, Economics Letters, and Economic Inquiry.

  • Bruce Elmslie is a Professor in the Economics Department, Whittemore School of Business and Economics at the University of New Hampshire, Durham, NH 03824; His interests are in growth theory, international trade, and the history of economic thought. His recent publications include the Journal of Regional Science, Review of International Economics, Kyklos, and Applied Economics.


Evidence of the importance of urban agglomeration and the offsetting effects of congestion are provided in a number of studies of productivity and wages. Little attention has been paid to this evidence in the economic growth literature, where the recent focus is on technological change. We extend the idea of agglomeration and congestion effects to the area of innovation by empirically looking for a nonlinear link between population density and patent activity. A panel data set consisting of observations on 302 USA metropolitan statistical areas (MSAs) over a 10-year period from 1990 to 1999 is utilized. Following the patent and R&D literature, models that account for the discreet nature of the dependent variable are employed. Strong evidence is found that agglomeration and congestion are important in explaining the vast differences in patent rates across US cities. The most important reason cities continue to exist, given the dramatic drop in transportation costs for physical goods over the last century, is probably related to the forces of agglomeration as they apply to knowledge spillovers. Therefore, the empirical investigation proposed here is an important part of understanding the viability of urban areas in the future.