Bridging scaling with agglomeration economies

The chapters in this book primarily focus on the scale and size of cities and urban systems. While some chapters touch upon the economic value of geographical scaling, such as Van Raan’s exploration of sectoral diversity, Sarkar’s examination of socio-economic inequalities, and Paulus et al.’s analysis of economic trajectories and scaling laws, the central premise of urban economics that is similar to that of the scaling literature, is not explicitly argued: that larger cities or regions (doubling in size) provide productivity advantages of approximately 5–10%, accounting for the sorting effects of individuals and firms (as more productive individuals and entrepreneurs tend to gravitate towards cities naturally). The transfer mechanisms of growth are essential in this literature. From the perspectives of urban economics and economic geography, cities are dense concentrations of people and economic activities that generate unique socio-spatial dynamics, setting them apart from non-urban areas. One of these dynamics is known as agglomeration economies, which encompasses a range of external benefits for individuals and firms located within the same urban space. However, alongside these benefits, there are also costs associated with higher density and larger size. The fundamental trade-off between the economies and diseconomies of agglomeration helps explain why cities do not grow infinitely. This chapter provides a summary of the key elements of the agglomeration debate and argues that research in urban economics offers valuable insights into identifying mechanisms that shape scaling advantages. Designing research that bridges the disciplines and offers more full explanations of the scaling facts we find is the core recommendation.