How Close Is Close? The Spatial Reach of Agglomeration Economies
Journal of Economic Perspectives
vol. 34,
no. 3, Summer 2020
(pp. 27-49)
(Complimentary)
Abstract
This paper considers the attenuation of agglomeration economies. Put another way: how close is close? The paper presents evidence of agglomeration effects operating at various levels of spatial aggregation, including the regional, metropolitan, and neighborhood scales. In fact, agglomeration effects also seem to operate below the neighborhood level, including within buildings and organizations. These effects attenuate, with nearby activity exerting the strongest effects. The attenuation of agglomeration economies has implications for urban spatial structure, the microfoundations of agglomeration economies, and commercial real estate. It also affects the ability of governments and businesses to internalize agglomeration economies.Citation
Rosenthal, Stuart S., and William C. Strange. 2020. "How Close Is Close? The Spatial Reach of Agglomeration Economies." Journal of Economic Perspectives, 34 (3): 27-49. DOI: 10.1257/jep.34.3.27Additional Materials
JEL Classification
- R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
- R32 Other Spatial Production and Pricing Analysis
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