ECO 421LEC Lecture Notes - Lecture 2: Military Cross, Meat Packing Industry, European Cooperation In Science And Technology
Document Summary
Economies of scale as factors for the existence and size of cities. Average cost = (fixed cost + variable cost)/output. In industries with scale economies in production we will have large plants. They must all be housed nearby: railroads had scale economies. Examples from history: pittsburg in the late 19 century was producing at some point 80-90% of the world"s steel. Scale economies external to firms: localization economies: businesses in the same industry locating in close proximity reduced some of their costs, these are called localization economies. Examples: (1) the wall street district in new york is a major cluster of financial firms, (2) silicon valley in the bay area is a major cluster of high technology firms. Scale economies external to firms: urbanization economies: businesses in the same industry locating in close proximity reduced some of their costs, these are called localization economies. Example: (1) vertically related industries such as animal slaughtering & meatpacking in.
