Abstract:Based on the theory of agglomeration externalities, this paper analyzes the mechanism of producer services agglomeration on regional innovation capability. Based on the panel data of prefecture-level cities in the Yangtze River Delta region from 2003 to 2018, this paper empirically tests the impact of three externalities of producer services agglomeration on regional innovation capability from the perspective of regional heterogeneity. In general, the development of innovation capacity in the Yangtze River Delta region mainly benefits from Porter externalities and Jacobs externalities of producer services agglomeration, and Jacobs externalities play a stronger role in driving innovation than Porter externalities. Mar externalities, Porter externalities and Jacobs externalities of producer services agglomeration in neighboring regions can promote the development of local innovation capability. Different types of agglomeration externalities have "selection effect" in different regions. Due to the influence of regional differences, the action directions of the three externalities are different. This also shows that Mar, Jacobs and Porter externalities can coexist, and it is necessary to carry out differentiated and hierarchical regional policies combining regional characteristics.