Urban economists generally understand cities to balance negative externalities of congestion against the positive effects of agglomeration on productivity and consumers (Henderson, 1969). It is commonly assumed that that agglomeration promotes product variety. Here we explore a related but distinct effect on consumers, the effect of agglomeration (or city size) on product quality. This question...

This paper analyzes the impact of fiscal equalization on asymmetric tax competition when positive agglomeration externalities are present. It shows that equalization of standardized tax revenue improves the spatial allocation of capital provided that agglomeration externalities are sufficiently strong. JEL Classification: R12, H71, H73.

This paper outlines a dynamic model of firm location choice, in an environment which includes both agglomeration effects and stochastic productivity shocks. The model follows closely the methods of Hopenhayn (1992) and his treatment of firm level entry and exit decisions. However, this model adds the complexity of a second location, as well as the existence of spillover effects, or agglomeratio...

The paper seeks to develop our understanding of the somewhat diffuse nature of technological externalities in technological space by associating a geographical dimension with the sectoral dimension. Using panel data this paper estimates a knowledge production function that allows for spillovers inside the same industry and outside, and for local as well as global geographical spillovers. This a...

By shouldering the burden of a big chunk of global production, and giving Shelter to half of the world’s population, currently cities play an important role in national economies. Benefits of agglomeration in cities have played a major role in the process of economic development of different countries, however, the expansion of urbanization has produced some problems including environmental and...

Innovation and technological change are central to the quest for regional development. In the globally-connected knowledge-driven economy, the relevance of agglomeration forces that rely on proximity continues to increase, paradoxically despite declining real costs of information, communication and transportation. Globally, the proportion of the population living in cities continues to grow and...

by shouldering the burden of a big chunk of global production, and giving shelter to half of the world’s population, currently cities play an important role in national economies. benefits of agglomeration in cities have played a major role in the process of economic development of different countries, however, the expansion of urbanization has produced some problems including environmental and...

Taking the early U.S. automobile industry as an example, we evaluate two competing hypotheses on geographic concentration of industry: local externalities versus employee spinoffs. Our findings suggest that both forces contribute to industry agglomeration through their specific channels, and the spinoff effect can be viewed as a special form of local externalities. Calibrating our model to the ...

This paper develops a spatial general equilibrium model that accommodates both congestion and agglomeration externalities, while firms’ and households’ land-use decisions are endogenous across continuous space. Focusing on the interaction between externalities and land use patterns, we examine the efficiencies of first-best policies and second-best pricing and placebased strategies using simula...

Entrepreneurship and Market Size: The Case of Young College Graduates in Italy We analyze empirically the effects of urban agglomeration on Italian college graduates’ work possibilities as entrepreneurs three years after graduation. We find that each 100,000 inhabitant-increase in the size of the individual’s province of work reduces the chances of being an entrepreneur by 0.2-0.3 percent. This...