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The unintended consequences of increasing returns to scale in geographical economics

Author

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  • Steven Bond-Smith

    (University of Hawai‘i Economic Research Organization)

Abstract

Increasing returns to scale is the basis for many powerful results in economics and economic geography. But the limitations of assumptions about returns to scale in economic growth theories are often ignored when applied to geography. This leads to an unintentional bias favoring scale and mistaken conclusions about geography, scale and growth. Alternatively, this bias is used as a convenient modelling trick by urban economists to describe agglomeration economies for innovation without examining the spatial mechanisms that actually create agglomeration economies. I discuss techniques to focus on the distinctly geographic mechanisms that define returns to scale at appropriate spatial scales.

Suggested Citation

  • Steven Bond-Smith, 2021. "The unintended consequences of increasing returns to scale in geographical economics," Working Papers 2021-4, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    • Handle: RePEc:hae:wpaper:2021-4
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    File URL: https://uhero.hawaii.edu/wp-content/uploads/2021/09/UHEROwp2104.pdf
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    Cited by:

    1. Marta Aloi & Joanna Poyago-Theotoky & Frédéric Tournemaine, 2022. "The Geography of Knowledge and R&D-led Growth [Real effects ofacademic research: comment]," Journal of Economic Geography, Oxford University Press, vol. 22(6), pages 1149-1190.
    2. Steven Bond-Smith & Peter Fuleky, 2023. "The effects of the pandemic on the economy of Hawaii," Current Issues in Tourism, Taylor & Francis Journals, vol. 26(23), pages 3846-3852, December.
    3. Steven Bond-Smith, 2022. "Diversifying Hawai‘i’s specialized economy: A spatial economic perspective," Working Papers 2022-5, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    4. Steven Bond-Smith, 2024. "Diversifying Hawai‘i's Specialized Economy: A Spatial Economic Perspective," Economic Development Quarterly, , vol. 38(1), pages 40-59, February.

    More about this item

    Keywords

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    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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