Associate professor, Faculty of Economics, Business and Tourism, University of Split
Assistant professor, Faculty of Science, University of Split
This paper constructs the model that links agglomeration economics with information asymmetries. It extends the literature by launching the concept that explains influence of the asymmetric information on agglomeration economies by emphasizing the role of the transaction cost under institutional framework. Consequently, the predictions of the model suggesting that impact of agglomeration economies depends on stages of development highlight the importance of different approach to the agglomeration economies phenomena in developing and developed countries.
Keywords: agglomeration economics, asymmetric information, transaction costs, institutions
JEL classification: R1, O4, D8
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