The Annals of Regional Science

, Volume 36, Issue 4, pp 551–573 | Cite as

Urban agglomeration: Knowledge spillovers and product diversity

  • Olga Alonso-Villar


There is no doubt that people like to migrate to large cities because they can acquire a wider range of products and jobs, but also because they can more easily exchange information and ideas. In this respect, we attempt to explain the formation of metropolitan areas by using a general equilibrium model, in which concentration emerges not only from interaction between increasing returns to scale at firm level, transport costs and labor mobility, but also from human capital externalities. This paper shows that there is new scope for government activity.

JEL classification: R13 R14 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2002

Authors and Affiliations

  • Olga Alonso-Villar
    • 1
  1. 1.Universidade de Vigo, Departamento de Economı´a Aplicada, Campus Lagoas-Marcosende, s/n; 36200 Vigo, Spain (e-mail:

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