Economies of agglomeration
Firms are located in
proximity to each other in order to reduce the cost is known as economies of
agglomeration.
It helps to
accumulate information and the flow of new and innovative ideas among firms.
Example 1
You can see
this in the field of information technology, there is a sez called mind space
in Hyderabad. In that there are lots of software companies exist. They located
to each other in order to attract clients and also they increase revenue by
sharing the security people and other workers and other common expenses.
Example 2
We can see
the example of vegetable markets, where all the sellers sell their vegetables
under one roof, by doing that they get information about competitors and also they
can get groups of customers. therefore, one can sell their vegetables in a
profitable manner. And also they can increase revenues by sharing their common
expenses.
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