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 ?
In this perspective, in line with the prediction of NEG models, the main focus of this paper is to estimate the firm or industry level economies of scale which drives agglomeration economies in the absence of technological externalities as also when accompanied by significant market failure (Fujita et al.
The spatial equilibrium model suggests that agglomeration economies are best identified through shocks to amenities or housing supply.
congestion and at the same time generate agglomeration economies. The
For this reason, it determines the importance of the interrelation between primary factors, following the models of Heckscher-Ohlin of comparative advantage, and comparing them with the factors of the New Economic Geography (NEG), which emerge around the effects derived from the market potential and the agglomeration economies.
He suggested that firms can benefit in several ways from agglomeration economies, like the specialization of labor, knowledge spillovers, access to specific resources, which can support firms' growth.
The main locational factors determined as the transportation costs and the agglomeration economies. The locational models have different views about the spatial structure of demand and supply.
(13.) In Cambodia, substantial agglomeration economies exist only in Phnom Penh and its suburb, thus, distance from the capital is supposed to reflect the magnitude of agglomeration economies.
This shows that the phenomenon of agglomeration economies is more dominant in developing countries, and has contributed much to the J Curve urbanization and has resulted into severe urban issues.
Research on agglomeration economies in cities of transition countries is scarce.
In particular, these studies focus on whether regional agglomeration economies influence FDI location decisions.
"Microfoundations of Urban Agglomeration Economies," by Gilles Duranton and Diego Puga, 2004.
Apart from functional economic market areas, there is also strong academic interest in agglomeration economies which can enhance productivity and innovation across city-region areas.