Territorial Review Copenhagen - Region Hovedstaden

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be most important to urban areas: there are indications that variations
between cities in the performance of established local firms make the largest
contribution to their overall success or failure (Cheshire and Gordon, 1998).
Policies that can significantly affect this will have the most potential to
contribute to local success.
Many cities that are attractive to firms are not necessarily attractive to
households and vice versa. This can be implied from Gabriel and Rosenthal
(2004), who constructed and analysed an annual panel of quality of business
environment and quality of life measures for 37 cities in the United States
from 1977 to 1995. The correlation between quality of business environment
and quality of life in their study is only about 5%. These findings suggest
that firms and households prefer different cities, consistent with the two
groups‘ different goals. With the ageing of the baby boomers, cities are
increasingly sensitive to retirees‘ choice of location. Cities most likely to be
dominated by retirees are those that are less attractive to firms, and more
generally, those cities that are attractive to households but that have low
housing prices. Retirees tend to seek out cities where local attributes are
capitalised into lower wages rather than higher land rents.
Competition between cities can be wasteful, for example in the case of
policies to attract inward investment that could yield benefits only for those
directly involved in development or new sites, or for non-local firms, which
can play off contending areas against each other. Some of these policies will
end up incurring costs of one kind or another that could negate the gains the
community can expect to make. A more sustainable choice is to identify
distinctive strengths that can be developed over the medium to long term.
One important distinction to make involves the extent to which a given
policy is diversionary: that is, whether it influences the location of a
particular activity rather than the overall productivity of resources (Cheshire
and Gordon 1998). Strategies that are too localised will lead to unproductive
competition between local units, with outcomes at best zero-sum across a
wider area, the gains being balanced by losses. These are important reasons
for focusing competition at the level of functional urban regions, rather than
local areas.
City collaboration can be a solution for wasteful competition. In many
cases, the key for generating support for the concept of collaboration
between cities is the identification of a shared competitor. By combining
two or more cities‘ critical mass in terms of asset bundles, population,
market catchment and economic output, collaborating cities seek to compete
at the next level up in the urban hierarchy. Collaboration is more likely to be
worthwhile for proximate cities where the potential exists to combine their
existing economies to create a single economic space, similar to those of the
largest cities. Increased mobility is often seen as the key to improving the