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Rethinking the Economics of Location and Agglomeration

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  • Philip McCann

    (Regional Science Department, University of Pennsylvania, 130 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6209, USA)

Abstract

Fundamental problems exist with the classical characterisation of agglomeration economies, since such definitions do not reflect the various cost issues on which firms may wish to economise. A lack of understanding of the relationship between the notions of market hierarchies and locational behaviour leads to confusion not only in applied economic interpretation, but more fundamentally in the construction of theoretical location models. In particular, neo-classical location theory can be shown to be crucially flawed as a basis for spatial analysis. This paper therefore attempts to provide an alternative definition of the various types of agglomeration economies such that the various strands of economic theory might be used in a more rigorous manner in the discussion of spatial increasing returns.

Suggested Citation

  • Philip McCann, 1995. "Rethinking the Economics of Location and Agglomeration," Urban Studies, Urban Studies Journal Limited, vol. 32(3), pages 563-577, April.
    • Handle: RePEc:sae:urbstu:v:32:y:1995:i:3:p:563-577
    DOI: 10.1080/00420989550012979
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    References listed on IDEAS

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    4. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    5. François Perroux, 1950. "Economic Space: Theory and Applications," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 64(1), pages 89-104.
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