Article | Review of Economics and Statistics | Forthcoming

Agglomerative Forces and Cluster Shapes

by William R. Kerr and Scott Duke Kominers

Abstract

We model spatial clusters of similar firms. Our model highlights how agglomerative forces lead to localized, individual connections among firms, while interaction costs generate a defined distance over which attraction forces operate. Overlapping firm interactions yield agglomeration clusters that are much larger than the underlying agglomerative forces themselves. Empirically, we demonstrate that our model's assumptions are present in the structure of technology and labor flows within Silicon Valley and its surrounding areas. Our model further identifies how the lengths over which agglomerative forces operate influence the shapes and sizes of industrial clusters; we confirm these predictions using variations across patent technology clusters.

Keywords: agglomeration; clusters; networks; industrial organization; Silicon Valley; entrepreneurship; Technology Flows; patents; Networks; Technology; Industry Clusters; Entrepreneurship; California;

Citation:

Kerr, William R., and Scott Duke Kominers. "Agglomerative Forces and Cluster Shapes." Review of Economics and Statistics (forthcoming).