In 1959, Hoover and Vernon stated that the central business district of the region was the logical site for a large number of the region's new firms, owing in part to the external economies to be found there. Since then, this incubator hypothesis has been tested by a large number of researchers, with mixed results. This note presents a new test of the hypothesis, using an extensive data base not previously used for this purpose. Considering births in both manufacturing and nonmanufacturing industries over a five-year period in the Detroit metropolitan region, the data fail to support the hypothesis for most industries, although there are some notable exceptions.
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