Economies of Agglomeration - Types of Economies

Types of Economies

There are two types of economies that are considered large-scale and external economies of scale; localization and urbanization economies. Localization economies arise from many firms in the same industry located close to each other. There are three sources of localization economies: the first is the benefit of labor pooling which is the accessibility that firms have to a variety of skilled laborers, which in turn provides employment opportunity for the laborers. The second benefit is the development of industries due to the increasing returns to scale in intermediate inputs for a product and the third source is the relative ease of communication and exchange of supplies, laborers and innovative ideas due to the proximity among firms.

Read more about this topic:  Economies Of Agglomeration

Famous quotes containing the words types of and/or types:

    The wider the range of possibilities we offer children, the more intense will be their motivations and the richer their experiences. We must widen the range of topics and goals, the types of situations we offer and their degree of structure, the kinds and combinations of resources and materials, and the possible interactions with things, peers, and adults.
    Loris Malaguzzi (1920–1994)

    He types his laboured column—weary drudge!
    Senile fudge and solemn:
    Spare, editor, to condemn
    These dry leaves of his autumn.
    Robertson Davies (b. 1913)