Agglomeration Economies of China's Three Major Urban Agglomerations, 1994–2008

Abstract

It is considered that the result of agglomeration in a region is natural enough to provide high level of benefits for the firms and agents located in the region, so the study measures the potential benefits. Efficiency, technological progress and increasing returns to scale are examined through empirical analysis of most developed three urban agglomerations in China. Technological progress are seen in the three major urban agglomerations as a whole, but most member cities in Yangtze River Delta and Pearl River Delta area are rather crowded and fail to be operating under increasing returns to municipal scale, while efficiencies are not equally improved among the three. The agglomeration economies of the two urban agglomerations are not as positive as we normally expect to be. So, for the higher growth and more fruitful production, the most developed and rich cities in China should restructure their social production system, and the two urban agglomerations-Yangtze River Delta and Pearl River Delta - also need to restructure their range or size of agglomeration.