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
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.