Working Paper: NBER ID: w9931
Authors: Gilles Duranton; Diego Puga
Abstract: This handbook chapter studies the theoretical micro-foundations of urban agglomeration economies. We distinguish three types of micro-foundations, based on sharing, matching, and learning mechanisms. For each of these three categories, we develop one or more core models in detail and discuss the literature in relation to those models. This allows us to give a precise characterisation of some of the main theoretical underpinnings of urban agglomeration economies, to discuss modelling issues that arise when working with these tools, and to compare different sources of agglomeration economies in terms of the aggregate urban outcomes they produce as well as in terms of their normative implications.
Keywords: No keywords provided
JEL Codes: R12; R13; R32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sharing mechanism (D16) | urban development (R58) |
| indivisible facilities (R53) | cost efficiency (D61) |
| cost efficiency (D61) | spatial clustering of populations (R23) |
| agglomeration (R11) | successful matches between firms and inputs (L14) |
| successful matches between firms and inputs (L14) | productivity (O49) |
| dense urban environments (R11) | knowledge generation and diffusion (O36) |
| knowledge generation and diffusion (O36) | innovation (O35) |
| innovation (O35) | economic growth (O49) |
| sharing mechanism, matching mechanism, learning mechanism (C78) | aggregate urban outcomes (R10) |