This paper explores the relation between vertical disintegration and the co-localization of
knowledge intensive business service (Kibs) firms in the metropolitan region of Milan, using
micro-geographic data and nonparametric methods. Our main results are that:(i) compared
to other manufacturing and service industries, Kibs firms show a “natural tendency” to
cluster;(ii) this tendency increases with the degree of vertical disintegration of Kibs firms.