Revisiting Marshall's Agglomeration Economies: Technological Relatedness and the Evolution of the Sheffield Metals Cluster

Potter A. and Watts H. D. Revisiting Marshall's agglomeration economies: technological relatedness and the evolution of the Sheffield metals cluster, Regional Studies. According to Alfred Marshall, firms receive increasing returns from a trinity of agglomeration economies: a local pool of skilled labour, local supplier linkages and local knowledge spillovers. This article re-examines the mechanisms underlying Marshall's agglomeration economies in the Sheffield metals cluster wherein Marshall discovered them. Despite the cluster's decline, empirical evidence is found that the mechanisms underlying Marshallian agglomeration economies continue to occur within the surviving metals industry. However, upon closer examination, Marshallian agglomeration economies have evolved to become more prevalent amongst plants that use related metals technology. The results highlight the importance of technological relatedness to cluster survival.