Economies of density

In microeconomics, economies of density express cost savings resulting from spatial proximity of suppliers or providers. Typically higher population densities allow synergies in service provision leading to lower unit costs. Economies of scale are not to be confused with economies of scale where unit costs are not linked to spatial properties.

Examples

Typical examples are found in logistic systems such as the distribution of goods (e.g. delivery of mail). Different network infrastructures such as electricity networks show as well show economies of density.

See also

• Economies of scale
• Economies of scope
• Network effects