ECON 3500 Lecture Notes - Lecture 4: Ideal Type, Perfect Competition, Virtuous Circle And Vicious Circle
5 Dec 2017
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If e-commerce is profitable: expect that competition will arise! Up until profits = 0. (more vertical lines @ diff. prices: as competitors enter, prices go down eventually. As cities grow in size, they derive new clusters". Ex: silicon valley in california or guelph agri-food area or waterloo technology: done right, a cluster leads to a virtuous circle and productivity gains. Agglomeration: external returns to scale: return because you are big; but external to a particular company, how growing big derives an increase in productivity, sometimes a big issue & sometimes not. 2 types of agglomeration benefits: localization economies (within an industry same location, urbanization economies (across industries same location) (ie: urban area) 3 mechanisms that use: ** to show whether effect is weak or small *: economies of scale in intermediate product. Information exchange & spillovers: labour market; matching + pooling.
