In microeconomics, economies of density are cost savings resulting from spatial proximity of suppliers or providers.
Typically higher population densities allow synergies in service provision leading to lower unit costs.
[1] If large economies of density exist there is an incentive for firms to concentrate and agglomerate.
[2] Typical examples are found in logistic systems where the distribution or collection of goods is needed, such as solid waste management.
[3] Delivering, for instance, mail in an area with many postboxes results in overall cost savings and thus lower delivery costs.