Matthew Drennan and Charles Brecher

In theory, public investments in mass transit can make urban economies more efficient by enhancing employers’ access to a larger labor pool at lower transport costs. Moreover, as first explained by Alfred Marshall, the concentration of economic activities in urban areas yields efficiency gains due to agglomeration economies. That is, each firm produces advantages that are shared by all firms located in the same area. The concentration of many businesses can thus produce many such external benefits. Can public transportation increase agglomeration economies?

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