Firms and workers are more productive in large cities than out of them. Do this productive advantages arise because firms and workers operate differently in dense and diverse urban environments? Or do they simply face fiercer competition, and it is the survival of the fittest in large metropoli that increases the average productivity? If the productive advantages of the cities are due, at least partly, to the so-called economies of agglomeration, that is to say, the advantages that arise when operating near many other firms and workers, what are the main causes of these advantages? The possibility of sharing suppliers with other companies? A free-flowing and stable labour market? Propitious surroundings for innovation and the diffusion of new technologies? Industry and services change location over time.What are the reasons behind this constant evolution of firm location? How important are differences in institutions and geography for the evolution of cities and regional disparities?

The research program “the productive advantages of cities” studies these questions through a combination of theoretical modelling and empirical studies. The Madrid Institute for Advanced Studies (IMDEA) Social Sciences and the Economics Department of University Carlos III de Madrid participate in the program, alongside researchers from Canada, the United States, Italy and the United Kingdom. The Madrid Regional Government finances the program through its R&D Activities Programme for Madrid-based research groups in Economics and Social Sciences, Humanities, and Law.