Economies of agglomeration.
The fact that companies or business entitites of a try to cut their cost by coming in proximity to each other. There are certain advantages and disadvantages for the companies as well.
The main advantages are it helps companies to cut their transportation cost of raw materials. It creates a huge market at one place. It is easier to get labour and materials at competitive price. The Government at many times gives tax relaxations to promote business like in Special Economic Zones.
Likewise, it has certain disadvantages as well. The prices of such places get high. The competitive market creates huge pressure on companies for survival. The availability of so many choices for the consumers makes it more so competitive.
Examples:- The simple example of vegetable markets can be taken to understand the concept. The fact that we have " Sabzi Mandis" where so many vendors do business indicate that it is convenient for them to have a common place to do business.It is because consumers get so many options at one place at competitive price they prefer such places for their requirements.
The fact that companies or business entitites of a try to cut their cost by coming in proximity to each other. There are certain advantages and disadvantages for the companies as well.
The main advantages are it helps companies to cut their transportation cost of raw materials. It creates a huge market at one place. It is easier to get labour and materials at competitive price. The Government at many times gives tax relaxations to promote business like in Special Economic Zones.
Likewise, it has certain disadvantages as well. The prices of such places get high. The competitive market creates huge pressure on companies for survival. The availability of so many choices for the consumers makes it more so competitive.
Examples:- The simple example of vegetable markets can be taken to understand the concept. The fact that we have " Sabzi Mandis" where so many vendors do business indicate that it is convenient for them to have a common place to do business.It is because consumers get so many options at one place at competitive price they prefer such places for their requirements.
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