The second is labor market pooling, where agglomeration allows a better match between an employers needs and a workers skills and. Urban agglomerations in china are generally dominated and planned as a mode of organizing. The microfoundations of urban agglomeration economies. We distinguish three types of microfoundations, based on sharing, matching, and learning.
For each of these three categories, we develop one or more core models in detail and discuss the. While the neg examines one set of possible agglomeration economies, a variety of other microfoundations for these metropolitan increasing returns have been proposed. Microfoundations of urban agglomeration economies by gilles. Agglomeration economies result from scale economies in the provision of intermediate inputs and are associated with spatial clustering of industrial activity. There has been a recent resurgence of interest among urban economists and regional scientists in empirical analysis of the microfoundations of urban agglomeration economies see, e. Zgoldstein and gronberg 10, and knowledge spillovers glaeser 7. Chapter 48 microfoundations of urban agglomeration economies. Microfoundations of urban agglomeration economies core. The present paper further explores the heterogeneity in. While estimation results generally confirm that labor. Duranton and puga 2004 categorize these nonneg microfoundations as either sharing. Firms within an industry form clusters in those locations that can realize scale economies in the provision of.
This paper studies the theoretical microfoundations of urban agglomeration economies. Estimating the agglomeration benefits of transport. Recent work has developed microfoundations for scale economies such as information. Dicussion of duranton and puga dp, 2004 nathan schiff shanghai university of finance and economics graduate urban economics, lecture 3 march 7, 2016 3. Population density 50 100 150 200 250 300 350 20 40 60 80 100 120 140 160 180. Recently, the literature has also begun to provide evidence on the microfoundations of external economies of scale. For each of these three categories, we develop one or more core models in detail and discuss the literature in relation to those models.
In each case, the literature suggests that agglomeration economies attenuate with distance. This is usually done within the urban economics paradigm of understanding the interactions between localization economies, city size and urban productivity abdelrahman 2000. First, it is only by studying what gives rise to urban agglomeration economies rather than merely stating. This paper considers the empirical literature on the nature and sources of urban increasing returns, also known as agglomeration economies. The magnitude and causes of agglomeration economies federal.
The marshallian microfoundations of agglomeration economies microfoundation paper key results natural advantage input sharing labor market pooling knowledge spillovers. This handbook chapter studies the theoretical microfoundations of urban agglomeration economies. Extending a differentiated product model that provides the microfoundations of urban agglomeration economies to include all three. The adb economics working paper series is a forum for stimulating discussion and eliciting. For instance, the composition of cities typically emerges as a consequence of the scope of different sources of agglomeration economies and their interaction. Numerous and frequentlyupdated resource results are available from this search. We distinguish three types of microfoundations, based on sharing, matching, and learning mechanisms.
Microfoundations of urban agglomeration economies nber. Volume 4, cities and geography, elsevier north holland, amsterdam, pages 2063 2117. Population density erh princeton university lecture 2. Cep discussion paper no 1619 may 2019 tales of the city. Final version evidence on the nature and sources of aggl.
For instance, the composition of cities typically emerges as a consequence of the scope of different sources of agglomeration economies and their interaction with other. The microfoundations of urban agglomeration economies interact with other building blocks of urban models in ways that we cannot recognise unless they are explicitly stated. Urban agglomeration and ceo compensation journal of. The logic of agglomeration harvard business school. Localization economies involve benefits to firms from expansion of their own industry, resulting in industry clusters. Microfoundations of urban agglomeration economies by. Handbook of regional and urban economics cities and. Microfoundations of urban agglomeration economies giles duranton, diego puga nber working paper no. Scale economies are a key feature in the urban literature, starting with marshalls 1890 frequently cited passages on how cities provide an environment of close contacts and neighborhoods generating localized information spillovers. Specialization is at the core of the emergence of agglomeration economies. Various papers explore the role of technological externalities in promoting agglomeration.
Indeed, as stressed byrosenthal and strange2004, \explicit theories of the microfoundations of agglomeration economies have nearly always. Spatial production and governance of urban agglomeration. Urbanization, suburbanization, gentrification, and. By studying the microfoundations of urban agglomeration economies we are looking inside the black box that justi. Urban agglomerations in developing countries like china, although have the same characteristics as the developed countries because of globalization, often show a more different and dynamic process. For instance, the composition of cities typically emerges as a consequence of the scope of different sources of agglomeration economies and their interaction with other aspects of. Microfoundations of urban agglomeration economies econpapers. The second broad question concerns the sources of agglomeration economies. International trade and investment this handbook chapter studies the theoretical microfoundations of urban agglomeration economies. Agglomeration economies are positive externalities that arise through the spatial concentration of economic activity. It has been demonstrated that agglomeration economies can arise from labor market pooling helsley and strange 11, input sharingz. Efcient city size nj decreases with commuting costs as measured by t and increases with the extent of aggregate increasing returns as measured byej. Efficient city size n j decreases with commuting costs as measured by. Urbanization economies occur when expansion of an urban area.
Reliable information about the coronavirus covid19 is available from the world health organization current situation, international travel. Evidence on the nature and sources of agglomeration economies. For instance, industry pairs both characterised by the presence of smaller firms show stronger effect s from input linkages a resul t in the spirit of chinitz 1961. Microfoundations of urban agglomeration economies researchgate. We distinguish three types of microfoundations, based on shar. Request pdf evidence for localization and urbanization economies in urban scaling we study the scaling of i numbers of workers and aggregate incomes. The main finding is that the development effects of urbanisation and the magnitude of agglomeration economies are very variable. Urban agglomeration and ceo compensation volume 51 issue 6 bill b. No 9931, nber working papers from national bureau of economic research, inc abstract. Recent research in economic geography has been able to.
The best known of these sources are those attributed to marshall 1920. According to urban economic theory, firms derive productive advantages from locating in close proximity and the existence of such benefits can explain the formation and growth of cities and dense industrial areas. On the relationship between agglomeration and growth 388 11. We regard this as one of the fundamental quests in urban economics for three main reasons. Chapter 49 in handbook of regional and urban economics, 2004, vol. Urban agglomeration plays an essential role in world urbanization. Microfoundations of urban agglomeration economies ideasrepec. Its e ects has been mainly linked to the scale of activity of an industry in a certain region.
Microfoundations of urban agglomeration economies book. Download citation microfoundations of urban agglomeration economies this paper studies the theoretical microfoundations of urban. Such causality is justified by the theory of agglomeration, but is difficult to establish empirically because estimates may be subject to sources of bias from endogeneity and confounding. In this approach, a tendency for pairs linked in the supply chain to coagglomerate is consistent with input sharing, while coagglomeration of industry pairs linked in. A core topic in economic geography is agglomeration economies, where cities and clusters of activity. The first of these is the sharing of inputs whose production involves internal increasing returns to scale. The case for including agglomeration benefits within transport appraisal rests on an assumed causality between access to economic mass and productivity. Oclcs webjunction has pulled together information and resources to assist library staff as they consider how to handle. While the agglomeration literature has much to say about how agglomeration economies are generated, it has less to say about heterogeneity in microfoundations. Microfoundations of urban agglomeration economies, by gilles duranton and diego puga, 2004.
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