Abstract

Despite the drop in transport and commuting costs since the mid-19th century, sizable and lasting differences across locations at very different spatial scales remain the most striking feature of the space-economy. The main challenges of the economics of agglomeration are therefore (a) to explain why people and economic activities are agglomerated in a few places and (b) to understand why some places fare better than others.</p>

To meet these challenges, the usual route is to appeal to the fundamental trade-off between (internal and external) increasing returns and various mobility costs. This trade-off has a major implication for the organization of the space-economy: High transport and commuting costs foster the dispersion of economic activities, while strong increasing returns act as a strong agglomeration force.

The first issue is to explain the existence of large and persistent regional disparities within nations or continents. At that spatial scale, the mobility of commodities and production factors is critical. By combining new trade theories with the mobility of firms and workers, economic geography shows that a core periphery structure can emerge as a stable market outcome.

Second, at the urban scale, cities stem from the interplay between agglomeration and dispersion forces: The former explain why firms and consumers want to be close to each other whereas the latter put an upper limit on city sizes. Housing and commuting costs, which increase with population size, are the most natural candidates for the dispersion force. What generates agglomeration forces is less obvious. The literature on urban economics has highlighted the fact that urban size is the source of various benefits, which increase firm productivity and consumer welfare.

Within cities, agglomeration also occurs in the form of shopping districts where firms selling differentiated products congregate. Strategic location considerations and product differentiation play a central role in the emergence of commercial districts because firms compete with a small number of close retailers.

Document type: Book

Full document

The PDF file did not load properly or your web browser does not support viewing PDF files. Download directly to your device: Download PDF document

Original document

The different versions of the original document can be found in:


DOIS: 10.1017/ccol0521818729.010 10.1017/cbo9780511805660 10.1006/jjie.1996.0021 10.1093/acrefore/9780190625979.013.152 10.1017/cbo9780511610240.011 10.1017/cbo9781139051552

Back to Top

Document information

Published on 01/01/2002

Volume 2002, 2002
DOI: 10.1017/ccol0521818729.010
Licence: CC BY-NC-SA license

Document Score

0

Views 2
Recommendations 0

Share this document

claim authorship

Are you one of the authors of this document?