MARSHALLIAN FACTOR MARKET EXTERNALITIES AND THE DYNAMICS OF INDUSTRIAL LOCALIZATION

When an industry has thus chosen a locality for itself, it is likely to stay there long: so great are the advantages which people following the same skilled trade get from near neighborhood to one another .... A localized industry gains a great advantage from the fact that it offers a constant market for skill. Employers are apt to resort to any place where they are likely to find a good choice of workers ...; while men seeking employment naturally go to places where there are many employers who need such skill as theirs .... The advantages of variety of employment are combined with those of localized industries in some of our manufacturing towns, and this is a chief cause of their continued growth. Alfred Marshall, Principles of Economics, 8th ed., pp. 271-272 (1920). © 1990.