Knowra Agglomeration economies Agglomeration economies Agglomeration economies are productivity benefits firms and workers gain by locating near one another, through shared resources, better matching, and knowledge exchange.
Labor pooling : The concentration of workers with related skills in one location, giving employers and workers more potential matches. A thick local labor market helps firms fill jobs and workers find suitable employment.
Industrial cluster : A geographic concentration of interconnected firms, suppliers, and institutions in a particular industry. Clusters are a visible form of industry concentration associated with localization economies.
Congestion : The crowding of transport, infrastructure, or shared space that slows movement and raises costs. Congestion can offset productivity gains from proximity as a location becomes denser.
Urban wage premium : The higher average wages observed in cities compared with less urban locations, after some worker characteristics are considered. Higher urban productivity can contribute to wage differences, alongside worker sorting and local costs.
Economies of scale : Reductions in average cost that occur as the scale of production increases. Shared suppliers and infrastructure can create scale advantages across nearby firms.
Input sharing : The sharing of suppliers, infrastructure, and specialized services among firms concentrated in one place. Nearby firms can support specialized suppliers and divide the costs of shared facilities.
Central business district : The commercial and employment center of a city, often marked by dense offices and services. Dense business districts can support frequent interaction and access to specialized services.
Diseconomies of scale : Rising average costs that occur when an organization or system expands beyond an efficient scale. Increasing local costs can counter the benefits firms receive from concentrating.
Regional inequality : Unequal economic outcomes among geographic regions within a country or larger area. Cumulative concentration can widen gaps between productive hubs and places that lose firms or workers.
Externality : A cost or benefit of an activity that affects others without being fully reflected in market prices. Knowledge spillovers are positive externalities that firms may not capture themselves.
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