Agglomeration Economies

Abstract

One influence shaping the economic landscape has not been given proper attention up to this point. The economies of agglomeration have been referred to in passing or dismissed by assumption. In the last chapter it was suggested that central clustering may arise from a search for these advantages rather than from any competitive urge drawing oligopolists towards the centre of a market. The evidence from our experience of the use of the land is of a massive degree of concentration of competing and complementary activities, pointing to a most potent force. Observation suggests that some industries derive advantages from locating in major centres of production or consumption, or from close association with other units of the same industry. The degrees of conglomeration in the geographical distribution of different activities point to a varying response to these agglomerative forces. To sort these matters out it will be necessary to be a little more specific. The advantages which give rise to industrial concentration have been recognized as powerful, yet are held difficult to evaluate. The main reason is that ‘agglomeration economies’ is a blanket term applied indiscriminately to a variety of specific advantages arising from proximate location.