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Urban agglomeration: Knowledge spillovers and product diversity


  • Olga Alonso-Villar

    () (Universidade de Vigo, Departamento de Economi´a Aplicada, Campus Lagoas-Marcosende, s/n; 36200 Vigo, Spain)


There is no doubt that people like to migrate to large cities because they can acquire a wider range of products and jobs, but also because they can more easily exchange information and ideas. In this respect, we attempt to explain the formation of metropolitan areas by using a general equilibrium model, in which concentration emerges not only from interaction between increasing returns to scale at firm level, transport costs and labor mobility, but also from human capital externalities. This paper shows that there is new scope for government activity.

Suggested Citation

  • Olga Alonso-Villar, 2002. "Urban agglomeration: Knowledge spillovers and product diversity," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 36(4), pages 551-573.
  • Handle: RePEc:spr:anresc:v:36:y:2002:i:4:p:551-573
    Note: Received: August 2000/Accepted: January 2002

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    References listed on IDEAS

    1. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 43-61.
    2. David A. Hennessy & Jutta Roosen, 2003. "Cost-Based Model of Seasonal Production, with Application to Milk Policy, A," Center for Agricultural and Rural Development (CARD) Publications 03-wp323, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Drabenstott, Mark, 1994. "Industrialization: Steady Current or Tidal Wave?," Choices, Agricultural and Applied Economics Association, vol. 9(4).
    4. David A. Hennessy & Jutta Roosen, 2003. "A Cost-Based Model of Seasonal Production with Application to Milk Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(2), pages 285-312.
    5. Larson, David F. & Butzer, Rita & Mundlak, Yair & Crego, Al, 2000. "A Cross-Country Database for Sector Investment and Capital," World Bank Economic Review, World Bank Group, vol. 14(2), pages 371-391, May.
    6. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
    7. Ingrid Henriksen & Kevin H. O'Rourke, 2003. "Incentives, Technology and the Shift to Year-Round Dairying in Late 19th Century Denmark," Trinity Economics Papers 200311, Trinity College Dublin, Department of Economics.
    8. Martinez, Stephen W., 2002. "Vertical Coordination Of Marketing Systems: Lessons From The Poultry, Egg, And Pork Industries," Agricultural Economics Reports 34051, United States Department of Agriculture, Economic Research Service.
    9. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders and Product Cycles," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 557-586.
    10. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
    11. Goodwin, Barry K. & Grennes, Thomas J. & Craig, Lee A., 2002. "Mechanical Refrigeration and the Integration of Perishable Commodity Markets," Explorations in Economic History, Elsevier, vol. 39(2), pages 154-182, April.
    12. Markus Lips & Peter Rieder, 2005. "Abolition of Raw Milk Quota in the European Union: A CGE Analysis at the Member Country Level," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(1), pages 1-17.
    13. Bera, Anil K. & Kelley, Timothy G., 1990. "Adoption of high yielding rice varieties in Bangladesh : An econometric analysis," Journal of Development Economics, Elsevier, vol. 33(2), pages 263-285, October.
    14. Dobson, William D., 2003. "Strategies for Developing Domestic and International Markets for Nicaragua's Dairy Products," Discussion Papers 37566, University of Wisconsin-Madison, Babcock Institute for International Dairy Research and Development.
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    Cited by:

    1. Kurt A. Hafner, 2011. "Trade Liberalization and Technology Diffusion," Review of International Economics, Wiley Blackwell, vol. 19(5), pages 963-978, November.
    2. Metaxas, Theodore & Economou, Athina, 2012. "Assessing the determinants of Firms’ Competitiveness in Greece: A Structural Equation Modeling Analysis," MPRA Paper 42794, University Library of Munich, Germany.
    3. repec:got:cegedp:31 is not listed on IDEAS
    4. George Petrakos & Georgios Fotopoulos & Dimitris Kallioras, 2012. "Peripherality and integration: industrial growth and decline in the Greek regions," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 30(2), pages 347-361, April.
    5. Olga Alonso-Villar, 2005. "The effects of transport costs within the new economic geography," Working Papers 0502, Universidade de Vigo, Departamento de Economía Aplicada.

    More about this item

    JEL classification:

    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns


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