... now more able to choose locations based on other criteria. Lower costs enable firms to make more profits, these lower costs also allow for firms to be more competitive to gain a greater market share. Another factor which influences costs of operating in different locations is the presence or absence of agglomeration economies. Agglomeration economies are a form of economies of scale. If a group of firms are in the same industry or involved in similar types of activity are located near to each other they may be able to secure cost saving which is available to all firms but cannot be exploited by one single firm. These savings can arise from many sources one example is the transport structure can be adapted to suit special needs of the industry. Such agglomeration economies are difficult to quantify and are usually set up close together and have to be set against ...

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