Cluster theory

In turn, this creates agglomeration spillovers which increases the total factor productivity of firms in the same county since they are all competing for the top spot.

[2] Clusters produce economies of agglomeration which benefit companies due to the transport cost saving (Glaeser); the closer you are to your neighboring firm the easier it is to exchange goods and ideas.

The steady presence of suppliers means low costs for the firms as well as an advantage to agglomeration includes cheaper and more rapid supply of intermediate goods.

Clusters create the notion of rivals through numerous firms competing for resources and for customers in a close proximity.

Due to high volumes of firms in a vicinity, companies are forced to further innovate and produce advancements in their respected industries.

Often times, city officials will incentivize high-tech companies to set up shop in close relation of each other to induce the cluster effect.

High tech clusters are incredibly technology oriented and have a much greater dependence on intellectual property due to the constant increasing levels of ideas, innovations and pertinent information.

The "cluster" consists of thousands of independent vineyards and hundreds of commercial wineries which supplies the vast majority of the American wine production.

[4] Wine has become an important factor in the local economy as an extensive system of industries has grown around these businesses to support the grape-growing and wine-making processes.

flocked to the area in pursuit of job opportunities which further incentivized tech companies to come to silicon Valley since they were in need of workers with those skillsets.