Do cities specialized in a narrow set of economic activites, or do they generalize, producing a diverse mix of products?
It turns out that the "or" in this question is misplaced: The typical region contains a wide variety of cities, from highly specialized cities to highly diverse ones. The specialized cities develop because of localization economies, while the diverse cities develop because of urbanization economies.
In fact,pecialize sd and diverse cities are actually complementary, serving different roles in a market economy.
Many firms start their lives in a diverse city and eventually relocate to a specialized city.