Question

Briefly explain what the term "agglomeration economies" refers to and briefly describe what the fundamental reason for the development of this particular type of econorny relates to. From Oman economy please provide two examples of factors associated with agglomeration economies and Identify what these factors help to explain. Identify two factors that would lead to diseconomies and briefly explain how the future of many of the world's cities will be likely be determined. pleas answer all the parts in the question

Answer 1

Agglomeration economies provide us benefits which we get when companies and people live near one another in clusters. This leads to saving of transport costs and ideas and people are easier to connect with. When transport costs and communication costs fall, then agglomeration economies become less important. Benefits: a) knowledge sharing and rise of IT sector is facilitated. b) easier availability of labor for firms is facilitated and this reduces cost of training and fringe benefits.
Diseconomies: a) competitive pressure is high; b) Prices of land is high.