The Behavioral Economics in Marketingās Podcast Geographic clustering | Definition Minute | Behavioral Economics in Marketing Podcast
Jan 28, 2023
A quick definition of geographic clustering and why related companies concentrate in the same area. A look at competitionās role in driving firms to co-locate. Silicon Valley is used as a concrete example of cluster formation and growth. A short intro to a mini-series of bite-sized economic definitions.
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What Geographic Clustering Means
- Geographic clustering is a concentration of related companies, organizations, or institutions in one area.
- Clusters raise productivity by building supporting infrastructure and attracting complementary firms.
Positive Effects Of Clusters
- Clusters can boost a company's productivity through improved local infrastructure and resources.
- Successful firms attract more entrants, creating self-reinforcing growth in the area.
Competition Can Create Clusters
- Clusters can also form from competitive pressures as similar businesses locate near each other.
- Coffee shops, gas stations, and fast food restaurants often cluster to compete for customers directly.