The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Urban Production Externalities

  • Antonio Ciccone
Reference work entry


Urban production externalities (agglomeration effects) are external effects among producers in areas with a high density of economic activity. Such external effects are the main explanation for why productivity is usually highest in those areas of a country where economic activity is densest. There is some disagreement about the strength of urban production externalities. What is clear, however, is that even weak urban production externalities can explain large spatial differences in productivity.


Congestion Increasing returns Instrumental variables Intermediate inputs Knowledge spillovers Labour productivity Local technological externalities Localization economies Mincerian wage regression Non-transportable input sharing Non-transportable intermediate inputs Outsourcing Schooling externalities Spatial externalities Skill-biased technical change Urban agglomeration Urban production externalities Urbanization economies Spatial wage differentials 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Antonio Ciccone
    • 1
  1. 1.