Agglomeration economies and urban public infrastructure
In: Handbook of Regional and Urban Economics
This chapter reviews the theoretical and empirical literature on agglomeration economies and urban public infrastructure. Theory links the two concepts by positing that agglomeration economies exist when firms in an urban area share a public good as an input to production. One type of shareable input is the close proximity of businesses and labor, that generates positive externalities which in turn lower the production cost of one business as the output of other businesses increases. The externalities result from businesses sharing nonexcludable inputs, such as a common labor pool, technical expertise, general knowledge and personal contacts. Another perhaps more tangible type of shareable input is urban public infrastructure. Public capital stock, such as highways, water treatment facilities, and communication systems, directly affect the efficient operation of cities by facilitating business activities and improving worker productivity.The literature has devoted considerable attention to both topics, but not together. Studies of agglomeration economies in several countries find that manufacturing firms are more productive in large cities than in smaller ones. Studies of the effect of infrastructure on productivity show positive, but in some cases statistically insignificant, effects of public capital stock on productivity. Most of these studies are at the national and state levels. Only a handful of studies have focused on the metropolitan level, and even fewer have estimated agglomeration economies and infrastructure effects simultaneously. Results from studies that include both types of shared inputs suggest that both spatial proximity and physical infrastructure contribute positively to the productivity of firms in urban areas. More research is needed to explore the interrelationships between urban size and urban public infrastructure and to open the "black box" of agglomeration economies and estimate how the various other factors associated with urban size affect productivity.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|This chapter was published in: ||This item is provided by Elsevier in its series Handbook of Regional and Urban Economics with number
3-38.||Handle:|| RePEc:eee:regchp:3-38||Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/bookseriesdescription.cws_home/BS_HE/description|
When requesting a correction, please mention this item's handle: RePEc:eee:regchp:3-38. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If references are entirely missing, you can add them using this form.