The systematic structure and predictability of urban business diversity

TL;DR

This paper uncovers a universal, self-similar structure in urban economic diversity, demonstrating how city size influences the distribution and growth of business categories through a generalized preferential attachment model.

Contribution

It introduces a novel theoretical model explaining the universal patterns in urban economic diversity and provides quantitative predictions of business distribution changes with city size.

Findings

Universal economic structure across U.S. cities

Quantitative predictions of business type abundances

Model explains empirical distributions and rank changes

Abstract

Understanding cities is central to addressing major global challenges from climate and health to economic resilience. Although increasingly perceived as fundamental socio-economic units, the detailed fabric of urban economic activities is only now accessible to comprehensive analyses with the availability of large datasets. Here, we study abundances of business categories across U.S. metropolitan statistical areas to investigate how diversity of economic activities depends on city size. A universal structure common to all cities is revealed, manifesting self-similarity in internal economic structure as well as aggregated metrics (GDP, patents, crime). A derivation is presented that explains universality and the observed empirical distribution. The model incorporates a generalized preferential attachment process with ceaseless introduction of new business types. Combined with scaling analyses for individual categories, the theory quantitatively predicts how individual business types systematically change rank with city size, thereby providing a quantitative means for estimating their expected abundances as a function of city size. These results shed light on processes of economic differentiation with scale, suggesting a general structure for the growth of national economies as integrated urban systems.