The benefits that firms and individuals receive from being located in close proximity to others in the same industry.
Clustering: The geographic concentration of economic activity in the form of firms, industries, and related institutions within a specific location.
Externalities: The impact of economic activity on the surrounding area or community, whether positive or negative, including benefits such as reduced transportation costs or drawbacks such as pollution.
Input-output models: A method of analyzing interdependencies between different sectors of a regional economy to delineate how economic impacts propagate through the system.
Labor markets: The study of the structure of and demand for labor within an urban area, including factors such as wage levels, availability of skilled workers, and immigration patterns.
Localization economies: The benefits that arise from the concentration of economic activity in a particular area, such as access to specialized inputs, knowledge spillovers, and efficient labor markets.
Network effects: The gains in productivity or benefits that arise from increased connections or collaborations between firms in the same industry or region, such as shared knowledge or infrastructure.
Urban land use patterns: The ways in which different land uses, such as residential, commercial, or industrial, are distributed throughout an urban area, and their relationship to economic activity.
Urban transportation systems: The study of the infrastructure and patterns of movement within an urban area, including factors such as access to public transportation, road congestion, and freight movement.
Knowledge spillovers: The transmission and diffusion of information and ideas between firms, industries, or individuals, resulting from proximity or collaborations, which can lead to technological innovation or productivity gains.
Firm location decisions: The factors that influence where firms choose to locate, such as market access, labor availability, and local infrastructure or amenities.
Localization economies: This occurs when firms in similar industries or related firms cluster together in a particular geographical area to benefit from sharing knowledge, skills, and technology.
Urbanization economies: This occurs when the density of population increases in an urban area, leading to the creation of a wide range of services, including specialized labor markets, suppliers of specialized inputs, and a larger market for goods and services.
Economies of scale: This arises when firms in a particular industry benefit from producing at greater levels of output to take advantage of economies of scale, which can result in lower costs per unit produced.
Innovation economies: This occurs when firms cluster together to share knowledge and expertise, resulting in more rapid innovation and entrepreneurial activity.
Bonding social capital economies: This arises when firms cluster together due to the presence of strong communal ties, resulting in greater collaboration and support for each other.
Infrastructure economies: This occurs when improvement in infrastructure in a particular locale leads to enhancement of transportation, communication, and energy systems, which can result in reduced costs and greater efficiency of production.
Knowledge spillovers: This happens when firms in a locality benefit from the knowledge generated by other firms in the area, leading to improved productivity and greater innovation.
Labor market matching economies: This arises when the location of firms in a particular area leads to matching labor supply with firms’ demands, resulting in wider selection and lower costs to firms.
Specialized inputs economies: This occurs when firms in a particular locality benefit from the presence of suppliers of specialized inputs, leading to cost saving, higher quality, and greater efficiency of production.
Localization government policies: This arises when the government implements policies that encourage the clustering of firms in a particular area to benefit from the agglomeration economy.