Are urban agglomerations a better breeding place for product innovation

Compared to firms in rural regions, firms in urban agglomerations of the Netherlands dedicate a higher share of their R and D to product development. In our Hurdle Count Data estimate of determinants of new product announcements we find that, with a given product-R and D-intensity, firms in central regions have higher probabilities of announcing at least one new product in a journal and they also announce new products in larger numbers. Such support for theurban hierarchy/filter down hypothesis was not found when confining our analysis to standard R and D data.