Geographies of Scope: An Empirical Analysis of Entertainment 1970-2000

by Richard Florida, Charlotta Mellander and Kevin Stolarick

Abstract

The geographic clustering of economic activity has long been understood in terms of economies of scale across space.  This paper introduces the construct of geographies of scope.  We distinguish between geographies of scope and the more commonly understood notions of economic diversity or geographic spillovers. Following research by Baumol and others (e.g. Baumol et al.., 1982) who define economies of scope as the efficiencies gained from sharing common inputs (from leveraging R&D or marketing departments across products to producing two products on a single assembly line), we argue that geographic economies of scope are driven by substantial, large-scale geographic concentrations of related skills, inputs and capabilities.  We examine this through an empirical analysis of the entertainment industry across U.S. metropolitan areas from 1970-2000. We use a variety of statistical techniques to probe for the effects of collocation of key related entertainment segments while controlling for the effects of scale or region size. The findings of our regression analysis indicate that geographies of scope (or collocation among key related entertainment subsectors and inputs) explain more of the economic geography of entertainment than does our scale variable (population size), though our regressions over time suggest the role of scope is decreasing.  Furthermore, we find that the entertainment sector as a whole and its key subsectors are significantly concentrated in two superstar cities – New York and Los Angeles – far beyond what their population size (or scale effects) can account for, while the pattern falls off dramatically for other large regions. Thus we find that scale economies are a necessary but insufficient factor for explaining the economic geography of entertainment: The rest of the explanation comes from scope economies – that is, the large-scale concentrations of related skills, inputs and capacities in geographic space.

This paper is available from the Journal of Economic Geography.

Citation:

Richard Florida, Charlotta Mellander, and Kevin Stolarick. Geographies of scope: an empirical analysis of entertainment, 1970–2000 J Econ Geogr (2012) 12(1): 183-204 first published online January 21, 2011 doi:10.1093/jeg/lbq056