The alternative scenario is to experiment - search for the ideal process - in the region's specialized cities. As usual, there are some trade-offs:
- Good news : lower prototype cost. The cost of producing a given prototype will be lower in a specialized city because each city has the specialized inputs for that production process.
- Bad news : higher moving cost. The search for the ideal process requires the firm to move from one specialized city to another. On average, a firm adopting this strategy will have three moves, compared to a single move for the firm that experiments in the diverse city.