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Rosenthal paper on spatial reach of agglomeration economies

Apr 13, 2020

How Close is Close? The Spatial Reach of Agglomeration Economies

John P. Harding, Jing Li, Stuart S. Rosenthal & Xirui Zhang

Journal of Economic Perspectives, April 2020

Stuart Rosenthal

Stuart Rosenthal

This paper considers the attenuation of agglomeration economies. Put another way: how close is close? The paper presents evidence of agglomeration effects operating at various levels of spatial aggregation, including the regional, metropolitan, and neighborhood scales. In fact, agglomeration effects also seem to operate below the neighborhood level, including within buildings and organizations. These effects attenuate, with nearby activity exerting the strongest effects. The attenuation of agglomeration economies has implications for urban spatial structure, the microfoundations of agglomeration economies, and commercial real estate. It also affects the ability of governments and businesses to internalize agglomeration economies.