Innovation agglomeration and urban hierarchy: evidence from Chinese cities

Innovation agglomeration leads to changes in the hierarchical structure of innovation, driving regional economic development. We establish a general equilibrium framework for urban innovation, that is to say, the process of production in a city can be divided into the knowledge production sector and final goods production sector. By this we explain the positive matching relationship between innovation agglomeration and a city's position in the urban hierarchy (herein called urban tier). Then we empirically analyse 286 prefecture level Chinese cities to evaluate the impact of urban tier on innovation agglomeration using a two-way fixed effect model. To reveal the nonlinear relationship between urban hierarchy and innovation agglomeration, panel quantile and threshold regression models were also used. The main results show that: (1) The spatial structure of innovation in Chinese cities is consistent with the urban tier, and the urban tier plays a significant role in promoting innovation agglomeration. (2) Heterogeneous spatial structures of innovation among urban tiers are reflected in the higher agglomeration of innovation resources in high-tier cities, and the impact of city scale on innovation agglomeration is nonlinear. When the city scale reaches a certain threshold value, its impact on innovation agglomeration is significantly strengthened.