Why denser areas are more productive
A key driver of productivity is ease of resource allocation. This column uses firm-level data for France to show that misallocation has a spatial dimension: resource allocation and the associated effect on productivity are related not only to firms’ characteristics, but also to the environment in which they operate. Denser commuting zones seem to offer a better match between employers and employees, leading to more productive firms.
Dense areas are circular, they estimate Pi pretty well, so Ito's condition in radius is met. We can say,"The cost of warehouses drops with the square distance from the downtown area. " That Ito statementmeans your allocation is much simpler, no need to drive the frig all over town.
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