Agglomeration in simple terms means accumulating in a mass whereas
Agglomeration in economics is the phenomenon where firms are located close to
one another. It is the kind of cost reduction a firms obtains by locating in
proximity to each other. This phenomenon helps to acquire information and the
flow of new and innovative ideas among firms. Business and resources grab huge
amount of advantage and efficiencies by being located close to one another.
Example: -
1.Shopping Malls-Although the stores in the mall may be not
related but locating close together gives them the opportunity to use the same
infrastructure.
2.IT firms that are located in Electronic city underlies the
economies of agglomeration, there are many advantages because the cluster of IT
firms attracts more supplier. Integration with the customer and Man pool is
easy when located together and achieve much more than a single firm could achieve.
3. Vegetable Hub where different kinds of vegetable vendors
are grouped together to sell the vegetables is also an good example of agglomeration.
It attracts a huge number of customers and the interaction with the customers
is very easy.
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