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EXPLAINING THE DEMAND FOR PRODUCER SERVICES: IS COST‐DRIVEN EXTERNALIZATION THE MAJOR FACTOR?
Author(s) -
Beyers William B.,
Lindahl David P.
Publication year - 1996
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/j.1435-5597.1996.tb00669.x
Subject(s) - externalization , variety (cybernetics) , industrial organization , business , factor cost , service (business) , economics , demand side , microeconomics , marketing , economy , computer science , psychology , artificial intelligence , psychoanalysis
Producer services employment has grown rapidly within advanced economies in recent years. The bases of demand related to this growth are not well understood by regional scientists. A common view is that this growth is largely attributable to cost‐driven factors and vertical disintegration processes on the part of producer service users. This paper demonstrates that cost‐driven externalization is not the most important force underlying growth in demand for producer services. The need for specialized knowledge is by far the most important factor behind producer services demand, combined with a variety of other cost, quasi‐cost, and non‐cost‐driven forces.