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It is interesting that Marshall's conception of "external economies"  
involving the localization of industry is similar to that of Adam Smith's  
in _The Wealth of Nations_.  I don't think Smith used the term (Marshall  
probably was the first, since he did use it), but he clearly has the  
concept in mind when he discusses the rise of cities and goes well beyond  
just the division of labour in the pin factory (internal economies) or  
that being determined by the size of the market, etc. to what we can  
clearly identify now as positive spillovers or externalities among firms.   
And I think Allyn Young recognized that Smith saw this. 
 
I note that this aspect has reappeared in the debates on "increasing 
returns" in complexity analysis and the "new economic geography" with 
respect to regional localization economies.  The dustup last year (?) on 
_Slate_ between Brian Arthur and Paul Krugman was a piece of this and I 
note that urban economists use the term "agglomeration economies" for 
external economies, a term that Krugman sneers at (agglomeration 
economies, that is). 
 
I believe that Dave Colander had a session on all this at the AEA, but 
unfortunately it was in the last time slot and thus I, at least, was 
unable to attend. 
 
Any further comentary anybody? 
 
Barkley Rosser 
 
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