Agglomeration effect

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As agglomeration effects in the be regional economy , the effects of urban agglomerations or agglomerations referred. These can be agglomeration advantages or agglomeration disadvantages.

In business administration , agglomeration describes the accumulation of different companies , typically at one location (so-called site agglomeration ). This agglomeration also leads to agglomeration effects.

In the Study of commerce in particular the Environmental Science dealt with agglomeration effects of the stationary retail trade . From a cross-company perspective, the increase in attractiveness, the upgrading of a (micro) location, which results from the spatial concentration of commercial and service companies at one location, is understood as an agglomeration advantage. From a stand-alone point of view, the increase in sales of a trading operation or business is referred to as an agglomeration advantage, which results from the proximity to shops with a similar range . (For more information on the "Agglomeration Act" see below)

Regional economy

Possible agglomeration advantages

Advantages arise from the spatial concentration of physical capital , companies , consumers and workers .

Specifically, this agglomeration leads to

  • Low transport costs
  • A large (local) market
  • A large supply of labor and thus the increased chance of quickly balancing the supply and demand for labor, especially for specialists ( matching , lower search costs).
  • The concentration of knowledge and human capital leads to knowledge spillover between companies.

Possible agglomeration disadvantages

Possible disadvantages of agglomerations are considered

  • Environmental pollution
  • high land prices
  • Bottlenecks in public goods (e.g. poor / overloaded infrastructure)
  • corruption
  • high competitive pressure
  • lack of reserve space.

Business administration

Spatial concentrations of companies usually lead to an increase in the attractiveness of the location. They can lead to agglomeration advantages in the form of savings. There are three types of savings:

  • Economies of scale ( economies of scale )
    • Internal (operational) savings (falling unit costs)
  • Localization economies divided into "forward linkages" and "backward linkages"
  • Density advantage (also urbanization economies)
    • External savings through spatial concentration of different types of businesses

Commercial management

For retail companies and their customers, the spatial concentration of companies in the same and non-industry sectors usually also increases the attractiveness of the location. This is evident in retail one-stop shopping . Since the agglomeration effects depend on the industry and the customers, they can be accentuated differently: While the agglomeration of several similar food discounters favors a tough price war (so-called limit pricing ), the agglomeration of shoe stores promotes the attractiveness of their enlarged "marketplace". The reason lies - at least in retail - in the product-related buying behavior : When it comes to shopping goods , customers want to be able to compare from a large selection; on the other hand, one would like to procure everyday products (convenience goods) with minimal transaction costs - quickly and with minimal search effort.

From the empirical observation that the neighborhood of two same sector by retail establishments both companies provides an added revenue, the other by the supervention industry the same operations can be even further increased because their common " marketplace win" for consumers to appeal and transparency, has been in the Study of commerce , the Agglomeration law postulated. Karl Christian Behrens called it the “law of agglomeration in retail with associated needs” and Richard L. Nelson called it “Rule of Retail Compatibility”. For initially two neighboring retail businesses in the same industry, the jointly achieved additional sales were shown as calculable using a formula. According to this, the additional turnover (agglomeration effect) based on the location network depends on three factors that can be quantified by measurement (1st / 3rd) and customer survey (2nd): It increases

  1. directly proportional to the degree of customer exchange (sales shares of customers buying in both stores),
  2. directly proportional to the ratio of planned purchases to total purchases in both stores and
  3. indirectly proportional to the ratio of the sales of the larger to the sales of the smaller business.

The general validity of this "law" is, however, disputed. In particular, it should be noted critically that a) the local sales success of neighboring companies in the same branch also depends on other factors and b) can be favored by third parties from outside the branch or new types of business . In any case, it is not possible to make a reliable forecast of the extent to which (or if at all) newly joining companies in the same sector generate additional sales for each individual provider. Nevertheless, the agglomeration law of retailing both the location theory has encouraged and the urban planning and mercantile practice of the site selection and optimization ( arcades , shopping centers , malls , community stores and malls communities, neighborhood communities).

literature

  • Karl Christian Behrens : The location of the trading companies. Cologne / Opladen 1965.
  • Richard L. Nelson: The Selection of Retail Locations. New York 1958.
  • Hans-Otto Schenk: The “laws” of trade. In: Business Laws, Effects and Principles. Munich 1979, ISBN 3-8006-0768-9 , pp. 28-37.

Footnotes

  1. ^ Richard L. Nelson: The Selection of Retail Locations. New York 1958, p. 66.
  2. ↑ Hans-Otto Schenk: Market economics of trade. Gabler, Wiesbaden 1991, ISBN 3-409-13379-8 , p. 522.