When Simplifying Assumptions are Too Simple: Developing a 'Catalogue' of Agglomeration Economies and Other Spatial Impacts of Infrastructure

Abstract

Traditional program evaluation of transport investment tends to focus on relatively narrow measures of market benefit (e.g. a transport project's reductions in travel-times that will be generated for travelers). In many cases benefit measures such as these are more than sufficient, especially when considering increments to existing transport and other infrastructure networks. However, transport infrastructure can have significant spatial effects such as expansion in effective access to markets for goods and services and an ability to achieve agglomeration and other spatial economies across those markets. Agglomeration economies in particular are inconsistently understood and often incompletely specified. This paper develops a template which categorizes agglomeration effects, indicating how they arise from real-world characteristics which are counter to standard simplifying assumptions which are the basis of most traditional evaluation methods.

Keywords: agglomerations, agglomeration economies, spatial economics, transport, urban economics, economic theory