Abstract
Urban production externalities (agglomeration effects) are external effects among producers in areas with a high density of economic activity. Such external effects are the main explanation for why productivity is usually highest in those areas of a country where economic activity is densest. There is some disagreement about the strength of urban production externalities. What is clear, however, is that even weak urban production externalities can explain large spatial differences in productivity.
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Ciccone, A. (2018). Urban Production Externalities. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2590
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2590
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