Question

what is agglomeration economies

Answer 1

Agglomeration economies or external economies of scale refer to the benefits from concentrating output and housing in particular areas.If an area specialises in the production of a certain type of good, all firms can benefit from various factors such as:1.Good supply networks2.Supply of trained workers3.Infrastructure built specifically for the industry4.Good transport links.Due to agglomeration economies, peopleand firms often concentrate in particular areas. For example, people tend to move to cities where is there is greater choice of jobs, social activities and specialist servicesHowever, there is always the risk of dis-economies of scale, where firms become too big and average costs start to rise.


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Answer 2

the clustering of businesses and resources known in economics as agglomeration,