Questions which will help you to write the essay:
a) What are the major sources of economies of scale and how do they operate? Why economic activities
are generally grouped together in space? What kind of externalities firms achieve if they locate close to
each other?
b) Based on the theoretical views and empirical results, what kind of effects the industrial structure has
especially on regional innovation activity? Why can we call cities as the centers of learning? Why face-to-
face contacts are still important for technological innovation?
c) How industry life cycle (based on AET) influences the evolution of externalities in agglomerations? What
kind of effect this has on the innovation activity of firms and their behavior in general?
You can decide the title of your essay.
Essay must be based on the following articles and course lectures.
• Glaeser E. L., Kallal H.D., Scheinkman J.A., Shleifer A. (1992). Growth in cities. Journal of Political Economy , 100, 1126-
1152.
• Storper M, Venables A J. (2004). Buzz: Face-to-face contact and the urban economy. Journal of Economic Perspectives, 12,
139-160.
• Feldman MP, Audretsch D (1999) Innovation in cities: Science-based diversity, specialisation and localised competition.
European Economic Review 43: 409–429
• Potter A, Watts, H D. (2011). Evolutionary agglomeration theory: increasing returns, diminishing returns, and the industry
life-cycle. Journal of Economic Geography, 11, 417-455.
Length of essay: 6 pages + references(1 page) (font size 12, row spacing 1.5, normal marginal: 2-
2,5 cm).
What are the major sources of economies of scale and how do they operate?
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