Economies of Agglomeration - It is defined as the cost reductions that the firms obtain by locating in proximity to each other. It helps to accumulate information and the flow of new and innovative ideas among the firms.
i.e. different firms located closer to each other just because of demand and supply would get easy.
Example - All the IT companies are in Electronic city or are all agglomerated near by due to several reasons :
1) For vendors it becomes easy to purchase and supply.
2) The interaction with the customers become easy.
3) Talent pool becomes also very easy to find.
4) Man power becomes easy to find.
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