The Analysis of Agglomeration Ecconomy (Part I)

Abstract

Most studies on agglomeration economy have ben qualitative, and no attention seems to have been focused on mathematical analysis. This paper is an attempt to present a rationale, explaining why agglomeration economy can arise, as a result of clustering of people in space. The method bases on probability theory and the study pays attention to the coefficient of variation in the Poisson distribution. In addition, the mathematical rationale in this paper is much supported by the empirical evidences of hospital, retail and industry locations, as the illustrative cases.