Agglomeration Economies

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Agglomeration Economies

The net advantage of building one or more businesses in a city or other large population center. Agglomeration economies occur when the larger market, lower transportation costs, and other benefits outweigh the added expenses (such as higher rent or taxes) of living in a city. This concept is closely associated with economies of scale. See also: Diseconomies of agglomeration.
References in periodicals archive ?
The great challenge facing research on the connection between city size and income is that this connection may reflect the tendency of people to move to already-productive areas, rather than any sort of agglomeration economy.
Second, in efforts to explain this inter-urban pattern, several agglomeration economy advantages are isolated (through a regression analysis) as significant predictors of FIRE firm specialization.
All of this suggests that our attenuation result is more consistent with the high costs of moving ideas than with the other sources of an agglomeration economy.
Both types of agglomeration economy are viewed by BEV proponents as being accomplished by managerial effort, and therefore the higher rents and value are attributed to an intangible factor.