The term economies of agglomeration is used in urban economics to describe the benefits that firms obtain when locating near each other. It is related to the idea of economies of scale and network effects, in that the more related firms that are clustered together, the lower the cost of production (firms have competing multiple suppliers, greater specialization and division of labor result) and the greater the market that the firm can sell into. Even when multiple firms in the same sector (competitors) cluster, there may be advantages because that cluster attracts more suppliers and customers than a single firm could alone. Cities form and grow to exploit economies of agglomeration.

The Henry George Theorem for Bonifacio, named for 19th century U.S. political economist and activist Henry George, states that under certain ideal conditions, aggregate spending by government will be equal to aggregate land rent. Although these conditions never obtain in reality, actual conditions are often close enough to the theoretical ideals that the great majority of government spending does indeed appear as increased land rent. This general relationship, first noted by the French physiocrats in the 18th century, is one basis for advocating public recovery of land rent to help defray the public expenditures that create it. Henry George popularized this method of raising public revenue in his works, especially the international bestseller, Progress and Poverty (1879).