In particular, one economy, namely Australia, exhibits both relatively larger agglomeration economies
and also a larger home-market effect than the relatively smaller economy, New Zealand.
Much evidence confirms the crucial importance of agglomeration economies
for innovative business start-ups.
As discussed, agglomeration economies
benefit firms in several important ways (see Feldman (2000) for a summary of the literature).
Knowledge transfers and spillovers that can occur from firm-university or firm-college relationships (or, collectively, HEI linkages) are often assumed to be commonplace in areas of high-technology firm concentration, and it is presumed that these relationships promote the cluster's agglomeration economies
and attractiveness to other firms.
Based on studies of FDI location choice and firm performance in China's economic transition, we may decompose the location effect on FDI performance into the following factors: location advantages, agglomeration economies
, and privatization.
(AGGLOM): Manufacturing production generally could become more efficient due to agglomeration economies
that result from existing manufacturing activities locating in close proximity.
The estimates of the three sub-periods show similar results for the coefficients of agglomeration economies
with significantly expected signs and R&D with insignificance.
Although the Denver/Boulder case is not necessarily characteristic of traditional agglomeration economies
based around core technologies or fabrication clusters, Lyons (1995) has illustrated that the benefits attached to 'text book' agglomeration do exist in a once peripheral space.
Further, he acknowledges that a premium results from agglomeration economies
after construction of a mall is completed, but that "this increment represents exactly the market value of the factors of its production (i.
are derived from economies of scale, which exist in large cities that offer locational advantages for the performance of certain types of economic activity.
The concept of an industry cluster involves the establishments' proximity to one another, while the concept of agglomeration economies
involves both proximity and the extent to which establishments are affected by nearby establishments.
If the resulting adjustment involves relocation, and new investments incur sunk costs and benefit from agglomeration economies
, then the new location can become the long-term home of the industry, permanently changing the industrial structure of the home and host economies.