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agglomeration economy — English
Several firms with interests in the same industry choose to locate in the same area in order to share costs and thereby minimise their own respective overhead costs. This can be achieved by linkages between the firms who join together to buy in bulk, or to train a specialist workforce, or share support services (such as water and electricity supply), or share commuter services to transport their workers to and from work. According to Weber’s model of industrial location agglomeration is regarded as the most important single factor in the location of firms and industries, but this is not undisputed. Car assembly plants, panelbeating firms and firms that manufacture individual car parts are often located in the same area where they can use economies of scale.
