Roberts breaks it down:
"Here's the basic idea: When smart, skilled people start to gather in a place, the process becomes self-perpetuating. More smart, skilled people show up to be near the others. And the more smart, skilled people you get close together, the more you reduce transaction costs and increase "knowledge spillover," which leads to commerce and innovation."
He points to Economics of Agglomeration: Cities, Industrial Location, and Regional Growth by Masahisa Fujita and Jacques-Francois Thisse as evidence.