Handbook of Research on Cluster Theory
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Handbook of Research on Cluster Theory

Edited by Charlie Karlsson

Clusters have increasingly dominated local and regional development policies in recent decades and the growing intellectual and political interest for clusters and clustering is the prime motivation for this Handbook. Charlie Karlsson unites leading experts to present a thorough overview of economic cluster research.
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Chapter 2: Agglomeration Economics

Philip McCann


Philip McCann 1 Introduction Agglomeration economics and the economics of industrial clustering have emerged over the last two decades as central issues of research into economic growth and performance. For both urban and regional economists and also economic geographers, the increased interest in these topics is obviously very welcome indeed. However, as the quantity and variety of research in this field has burgeoned in economics, economic geography, urban planning and even sociology, the mixing, and sometimes rather liberal use, of technical terminology, has led to a certain amount of analytical overlapping, confusion and duplication. For this reason, this chapter will consider the origins and analytical foundations of different views and hypotheses regarding the potential advantages of agglomeration, the structural assumptions underlying agglomeration and clustering, and finally the empirical challenges associated with these issues. The aim of the chapter is therefore to disentangle these various issues and to clarify the analytical foundations of agglomeration economics, as well as to outline the empirical challenges associated with these issues. In order to do this we adopt a transactions-costs framework which has been employed elsewhere. The reason is that this is the most parsimonious way of analytically disentangling these various issues from a range of different approaches and different analytical traditions. As we will see in this chapter, while analytically classifying different types of agglomeration and clusters is itself difficult, the empirical identification of these is also very difficult. As such, the observation and measurement of agglomerations...

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