ECONOMIES OF AGGLOMERATION

ECONOMIES OF AGGLOMERATION :

                              Cost reductions that firm obtain by locating in proximity to each other.

  Example : Clusters,

                   SEZ 'S

                   Knowledge parks.

                           

                               It helps to accumulate information and the flow of new and innovative ideas among firms.

                               It is a DEMAND SIDE ECONOMICS.

 Example : So many IT companies are there in Electronic city in Bangalore.

                               Because it was easy for vendors to reach them.

                               They can meet all suppliers.

                               They can easily access engineers from colleges which are there.

                               They get cost savings.

                               Information and Innovation flows through these companies.

                               They meet their clients and customers

                          So they gain demand side cost advantages.

ECONOMIES OF AGGLOMERATION TAKES ADVANTAGE OF PROXIMITY.

                       This is known as Economies of Agglomeration.