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. Ciccone and Hall address this reverse causality issue by turning to historical variables, such as nineteenth-century population and railroad density.
The possibility that these coefficients might be different for different types of cities is captured by the term [b.sub.1][X.sub.i] which allows city-level characteristics, [X.sub.i], to impact the agglomeration economy. This procedure requires [b.sub.0] and [b.sub.1] to be constant across space.
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. To the extent that this interpretation is correct, the ideas being transported must be Marshallian knowledge spillovers or some other type of social interaction.
(3) This term is used loosely to designate any type of agglomeration economy (linked to local institutions, to inter-sectorial input-output relationships and personnel exchange etc.) that can not be classified under the traditional 'localisation' of 'urbanisation' headings.
This dynamic has been labeled an internal agglomeration economy. External agglomeration economies accrue to properties surrounding a mall, where heightened traffic patterns create attractive commercial sites in the mall's vicinity.