Limits to industrial agglomeration

Karsten Junius

No 762, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper presents an economic geography model to show the spatial effects of economic integration. While other authors mainly focused on the explanation of cumulative causation effects that lead to complete concentration or absolutely equal dispersion of industries, this paper explains why limits to industrial agglomeration can be observed in reality. It argues that cumulative causation effects can be counterbalanced by further centrifugal forces such as land rents, adverse self-fulfilling expectations and congestion effects. For large scale agglomerations, congestion effects may be the most relevant force that stop a cumulative trend towards complete concentration caused by scale economies and trade costs.

Keywords: Economic Geography; Agglomeration; Congestion; Location Theory (search for similar items in EconPapers)
JEL-codes: F12 R12 (search for similar items in EconPapers)
Date: 1996
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:762

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