Economics at your fingertips  

Agglomeration and the extent of the market: Theory and experiment on spatially coordinated exchange

Jordan Adamson

Journal of Economic Behavior & Organization, 2021, vol. 190, issue C, 838-850

Abstract: Cities and marketplaces are central to economic development, but we know little about the mechanisms that cause such agglomerations to form. I theorize that evolutionary forces select for agglomerations when individuals desire to spatially coordinate exchange in complex environments. To test this idea, I perform a laboratory experiment where geographically dispersed individuals bring different goods to a location for trade. Consistent with the theory, I find that individuals spontaneously coalesce to reap the gains from exchange and there is more agglomeration in economies with a larger variety of goods. I also find that agglomerations re-emerge at the same locations after shocks, being land-tied reduces agglomeration but magnifies the effect of variety, individual location choices aggregate to create a Zipf population distribution, and individuals earn more in agglomerations.

Keywords: Spatial coordination; Agglomeration; Pure-exchange (search for similar items in EconPapers)
JEL-codes: C92 F19 R12 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.jebo.2021.08.009

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2023-08-12
Handle: RePEc:eee:jeborg:v:190:y:2021:i:c:p:838-850