Which term refers to the process of industrial deconcentration in response to technology and congestion costs?

Which term refers to the process of industrial deconcentration in response to technology and congestion costs?

• A. Urbanization
• B. Globalization
• C. Deglomeration
• D. Agglomeration

Answer: (C)

The main idea being tested is deglomeration—the dispersion of economic activity away from dense industrial clusters as costs of crowding rise and technology makes proximity less essential. When congestion, high rents, and other urban frictions increase, firms gain by spreading out to lower costs, access new markets, or tap different labor pools. Advances in technology and communications also reduce the need to be physically close to other firms or suppliers, making relocation more appealing. This combination drives deconcentration of industry, which is exactly what deglomeration describes. By contrast, urbanization is about population concentration in cities, globalization is about cross-border integration, and agglomeration is about clustering, not dispersion.

The main idea being tested is deglomeration—the dispersion of economic activity away from dense industrial clusters as costs of crowding rise and technology makes proximity less essential. When congestion, high rents, and other urban frictions increase, firms gain by spreading out to lower costs, access new markets, or tap different labor pools. Advances in technology and communications also reduce the need to be physically close to other firms or suppliers, making relocation more appealing. This combination drives deconcentration of industry, which is exactly what deglomeration describes. By contrast, urbanization is about population concentration in cities, globalization is about cross-border integration, and agglomeration is about clustering, not dispersion.