Creativity and the city: testing the attenuation of agglomeration economies in Barcelona

The aim of this paper is to infer the spatial extent of agglomeration economies for the creative service industries (CSI) in Barcelona and its relationship with firm performance controlling for urban characteristics and demand factors. Using micro-geographic data from the mercantile register for firms between 2006 and 2015, I estimated the effect of intra-industry and inter-industry agglomeration in rings around location on productivity in Barcelona. The main results are: (1) for CSI, at a micro-spatial level, localisation economies are important within the first 250 m; (2) for non-CSI, having employees in the CSI in close proximity (250–500 m) enhances their productivity; (3) for symbolic-based CSI firms, localisation economies—mainly understood as networking and/or knowledge externalities—have positive effects on TFP at shorter distances (less than 500 m), while for the two other knowledge-based CSI (i.e. synthetic and analytical) localisation economies seem not to be so important; and (4) market potential does not offset localisation economies for CSI. These results strongly suggest the importance of agglomeration externalities in CSI, which are strongly concentrated in the largest cities.