LOCATING OUTSIDE A LINEAR CITY CAN BENEFIT CONSUMERS*

ABSTRACT We investigate the effects of restricting the locations of firms in Hotelling duopoly models. In standard location‐price models, the equilibrium distance between firms is too great from the viewpoint of consumer welfare. Thus, restricting the locations of firms and shortening the distance between them improves consumer welfare by reducing prices and transport costs. We introduce strategic reward contracts into location‐price models and find that, in contrast to the above result, restrictions on the locations of firms reduce consumer welfare. These restrictions reduce transport costs but increase prices by changing the strategic commitments of the firms.     

Clustering and Dispersion of Duopolists in a Linear Market

The locations that two sellers will choose in a linear market has long been of interest. It is well accepted that firms will tend to cluster in the center of the market as long as demand for the product is inelastic and the market area is bounded. It has also been stated that clustering is less strong as demand becomes more elastic, but questions of when this dispersion occurs and what affects it remain to be addressed. This paper further explores clustering in spatial duopoly as elastic demand is allowed. Results indicate that the clustering behavior of sellers is related to the price of the product they sell, the cost to the consumer of acquiring the product, and the elasticity of demand. Locations of sellers in a linear market will lie between the median location and the quartiles as these parameters vary.     

SPATIAL COMPETITION WITH LOCATION-DEPENDENT COSTS*

This paper investigates the behavior of spatially-competitive firms whose costs depend on their locations. Necessary and sufficient conditions for optimum locations are derived. Comparative-statistics analysis of the equilibrium shows that the responses of firms to changes in input and output transport rates depend on the properties of consumer demand curves or are ambiguous in sign.     

Knowledge Production,Urban Locations and the Importance of Local Networks

This paper analyses the relationship between knowledge production and urban locations in industrial design, a knowledge-intensive business service (KIBS). KIBS concentrate in urban locations. This is often explained by the co-location of client firms and market access in large cities. Recent research on knowledge production, however, reveals that knowledge productive networks are significant for both the competitiveness and location of KIBS. Thus, to understand the urban location of industrial design, it is important to analyse how knowledge production is organized within the industry. Industrial design is concentrated in urban locations, but most of its clients are located elsewhere. Hence, it seems that industrial design firms concentrate in urban locations mainly because their knowledge networks include specific types of formal and informal local social networks.     

UNCERTAIN INCOME AND HOUSING PRICE AND LOCATION CHOICE*

ABSTRACT. In this paper, we adapt recent developments in uncertainty modeling to the location choice paradigm. In particular, we analyze the impact of income and housing price uncertainty on housing demand and location demand characteristics in a partial equilibrium framework. We begin by recognizing that housing consumption cannot readily be altered in response to changes in income and price. We find that income and house price risk affect housing and location demands in different ways. Additionally, the spatial characteristics of price risk also affect consumer housing and location demands. For example, if housing price risk is lower farther from the central city, housing demand can be greater in those locations even with the higher transportation cost. Thus, over some locations, the expected price gradient could be positive.     

Location Equilibrium for Cournot Oligopoly in Spatially Separated Markets

Consider a two-stage non-cooperative Cournot game with location choice involving n≥ 2 firms each with several facilities. There are m≥ 2 spatially separated markets constituting the vertices of a network. Each firm first selects the locations of their facilities and then selects the quantities to supply to the markets to maximize its profit. There exists a Nash equilibrium in the quantities offered by each firm at the markets. Furthermore, when the demand in each market is sufficiently large, each firm chooses to locate its facilities only at vertices. With linear demand in each market, there exists a Nash location equilibrium.     

THE EFFECTS OF ZONING IN SPATIAL COMPETITION

ABSTRACT This paper considers a location model to illustrate the effect of zoning on competition. A planner is in charge of designing a city in a circular space where firms and consumers are located on different sides. With this type of market configuration, equilibrium in location under concave transport costs is proved. Then, a welfare function with different weights attached to consumer and firm surpluses is introduced to highlight zoning regulation as an influential competition policy tool. Depending on the regulator's political profiles and the demand, it is shown that zoning can lead to strong, weak, or moderate competition.     

SPATIAL PRICING IN INTERDEPENDENT MARHETS*

ABSTRACT. Conditions for spatial price equilibrium are derived for a set of firms in oligopolistic spatial competition, distributed at fixed locations in a heterogeneous region where consumer purchasing patterns are a probabilistic function of the price distribution rather than a deterministic function of proximity to firms. The resulting prices vary with accessibility to consumers or with the degree of local spatial monopoly, and result in non-zero profits for firms. Conditions describing the existence and stability properties of this spatial price equilibrium are defined, and are shown to be equivalent for two different hypotheses concerning disequilibrium pricing behavior: a partial price adjustment model and a Bertrand game. For two different profit goals, total profit maximization and profit rate maximization, it is shown that a spatial price equilibrium exists and is at least locally quasi-stable.     

The Net Effects of Large Plant Locations and Expansions on County Employment*

This paper argues that the net economic impact of new firm locations or expansions is determined by a multitude of opposing forces. Using a unique database, I set out to evaluate the net effects of these opposing forces by looking at the net change in local employment and population arising from large (greater than 300 new jobs) firm locations or expansions in the State of Georgia. The analysis suggests that the employment multipliers associated with new firm locations are much less than one; that is, the net employment effect of a large firm opening is smaller than the gross employment impact. This result is consistent with other empirical economic impact studies, which find multipliers much smaller than those of typical input–output models, often less than unity, and a previous study showing little net effect of large plant openings. Expansions of existing establishments are shown to have substantial multiplicative effects, however, with an average employment multiplier of 2.0. I discuss possible reasons for differential impacts across new and expanding firms, focusing on the nature of the firms. Differences in net impact across industries and high‐tech versus low‐tech firms also is evaluated. I find that the impact of large firm locations or expansions on population in the resident county generally is negative, but positive for the broader region encompassing the county of location and its contiguous neighbors.     

SPACE–TIME MEASURES OF DEMAND FOR SERVICE: BRIDGING LOCATION MODELLING AND ACCESSIBILITY STUDIES THROUGH A TIME‐GEOGRAPHIC FRAMEWORK

Demand for service in location modelling is often evaluated based on the spatial proximity of fixed and static reference locations of demand (e.g. home) to a facility, which ignores person‐specific activity–travel patterns and the temporal changes in demand for service throughout the day. To address these limitations, this study draws upon recent developments in space–time measures of individual accessibility to explore the spatial and temporal structures of demand by considering individuals' space–time constraints and impact of existing urban structures. Based on a time‐geographic framework, eight space–time demand measures were developed and compared with three conventional location‐based demand measures for 12 hospitals through an empirical study conducted in Columbus, Ohio. The results show that geographic proximity between clients' home and facilities may not be an effective indicator for service demand, and conventional demand measures tend to underestimate potential demand for service in most situations. The study concludes that space–time demand measures that take into account people's activity‐travel patterns in space–time would lead to better estimation of demand for service in most cases.     

Functional Relations in Distribution Channels and Location Patterns of the Dutch Wholesale Sector

Wholesale firms play an important role in the distribution of goods. They stimulate the flow of goods towards the final consumer by means of their intermediate position between the manufacturing sector and the retail sector in the distribution channel. This paper will focus on the question whether there is a link between the position of wholesale businesses in the distribution channel and their spatial choice of location. Can the position of the wholesale sector in the distribution channel be regarded as an influential location factor or not? As such, the location factor to elaborate is the location with regard to the suppliers and buyers of wholesale firms. First, the change of the spatial pattern over the long term is set out by means of a series of maps. Second, an inquiry has been set out in order to obtain an insight to the position of wholesale firms in the distribution channel. The major findings are that the sectors of repair shops, retail, manufacturing industry and building industry have the most business contacts with wholesale firms. Most business contacts are on a national level. The position of the wholesale sector in the distribution channel alone does not explain the choice of location. But the paper shows that the position is closely linked to other factors, such as accessibility, short distances and centrality.     

The Effect of Hedonic Migration Decisions and Region-Specific Amenities on Industrial Location: Could Silicon Valley Be in South Dakota?

This paper analyzes the effect of hedonic migration decisions and regional amenities on industrial location. Labor-intensive firms bifurcate into companies that follow the workers completely to the most attractive places, and companies which engage in a trade-off between "following" and "compensation for disamenities." In the latter case, regional amenities induce three distinct location patterns: (a) a concentration of firms where the level of amenities is rapidly changing, (b) a gradual change of industrial composition at intermediate locations, and (c) a concentration of specific industries at the periphery of high-amenity areas. These patterns explain some of the controversial empirical findings about regional amenities and migration.     

The Optimal Nodal Location of Public Facilities With Price-Sensitive Demand

The purpose of this paper is to present some models for the location of public facilities in nodal networks that explicitly maximize social welfare by accounting for price-elastic demand functions. The models presented here are general; yet they are mathematically equivalent to the plant location problem and are therefore amenable to solution procedures developed for the plant location problem. The models presented here distinguish between two institutional environments that reflect the degree of power of the consumer to choose which facility to patronize. If consumers can be assigned arbitrarily to facilities and can be denied service, then the environment is one of public fiat. If consumers must be served at the facility of their choice, then a “serve-allcomers” environment exists. Separate models for each environment are specified, and the relationship between optimal assignments and pricing policies is developed.     

Product Differentiation and Location Choice in a Circular City*

Abstract. The paper analyzes spatial competition among firms that sell substitute and/or complementary products. The firms first choose locations on the perimeter of a circular city and then compete in quantities (à la Cournot). Both linear and convex (quadratic) transport costs are considered. In general, multiple location equilibria are encountered. Complete agglomeration, partial agglomeration, and complete dispersion are possible. Convex (quadratic) transport cost substantially shrinks the set of equilibria obtained under linear transport cost. In general, the results obtained for a larger number of firms selling complementary products are strikingly different from those obtained under a duopoly.     

Digital gravity? Firm birth and relocation patterns of young digital firms in Germany

This paper analyses the spatial patterns of young (<10 years) digital firms in Germany between 2008 and 2017 on county level. Determinants of firm birth locations as well as relocations are considered jointly to understand differences in location choices within firms' life cycles. I match commercial register data of 107,321 firms with county-level administrative data to capture local characteristics. Using an OLS model with fixed effects, I find that the local knowledge base—that is, universities, research institutes, and colocated incumbents—are significant key determinants of digital firm birth when controlling for a host of local characteristics. My results indicate that for five firms per 1000 inhabitants, there is around one firm birth. Second, using a fixed effects gravity model for the analysis of relocations, I find that the most dominant explanatory factor for firm relocation across specifications is distance, that is, relocation costs. Relocation flows are more than twice as high to neighboring counties relative to other locations which shows that digital firms are not as footloose as their business model may suggest. Jointly, my results reflect economic activity's regional persistence, particularly for new firms. My paper provides evidence for policies targeting homogenous digital clusters based on strong colocation and that digital economic activity is not shifted over long distances, but the regional entrepreneurship capital is crucial for local growth.     

Accounting for Temporal Demand Variations in Retail Location Models

This article develops and calibrates a spatial interaction model (SIM) incorporating additional temporal characteristics of consumer demand for the U.K. grocery market. SIMs have been routinely used by the retail sector for location modeling and revenue prediction and have a good record of success, especially in the supermarket/hypermarket sector. However, greater planning controls and a more competitive trading environment in recent years has forced retailers to look to new markets. This has meant a greater focus on the convenience market which creates new challenges for retail location models. In this article, we present a custom built SIM for the grocery market in West Yorkshire incorporating trading and consumer data provided by a major U.K. retailer. We show that this model works well for supermarkets and hypermarkets but poorly for convenience stores. We then build a series of new demand layers taking into account the spatial distributions of demand at the time of day that consumers are likely to use grocery stores. These new demand layers include workplace populations, university student populations and secondary school children. When these demand layers are added to the models, we see a very promising increase in the accuracy of the revenue forecasts.     

THE DETERMINANTS OF LOCALIZATION AND URBANIZATION ECONOMIES: EVIDENCE FROM THE LOCATION OF NEW FIRMS IN SPAIN

The objective of this paper is to analyze why firms in some industries locate in specialized economic environments (localization economies) while those in other industries prefer large city locations (urbanization economies). To this end, we examine the location decisions of new manufacturing firms in Spain at the city level and for narrowly defined industries. First, we estimate firm location models to obtain estimates that reflect the importance of localization and urbanization economies in each industry. Then, we regress these estimates on industry characteristics related to the potential importance of labor market pooling, input sharing, and knowledge spillovers. Urbanization effects are high in knowledge‐intensive industries, suggesting that firms locate in large cities to benefit from knowledge spillovers. We also find that localization effects are high in industries that employ workers whose skills are more industry‐specific, suggesting that industries locate in specialized economic environments to share a common pool of specialized workers.     

台商投资大陆地区的区位选择及其空间拓展研究

台商在大陆地区已经有三次大规模的投资热潮,每次热潮都有不同的产业特性以及相应的区位偏好,从而导致在大陆地区规律性的空间拓展。本文在分析台资在大陆地区空间拓展特征的基础上,就台资转向大陆以及在大陆地区空间拓展的原因展开分析,认为台资企业在全球范围内的发展战略与其对外投资的区位选择密切相关。同时,大陆地区台资在当地化的嵌入程度也是影响其企业发展战略的一个重要因素,从而影响台资的空间扩展路径。     

HIGH-TECHNOLOGY JOBS AND WORKER MOBILITY*

ABSTRACT. The premise of this paper is that one can discover much about the location determinants of high-technology industry by examining the location (migration) decision of workers with high-technology occupations. A model of the high-technology worker migration decision is developed that permits estimation of worker response to both personal and area characteristics, the latter chosen to mirror location factors often cited by high-technology firms as important for both the attraction and retention of their specialized work force. Logit estimates of this model between 1975 and 1980 are presented. The paper is concluded with a discussion of policy implications.     

Aggregation Decomposition and Aggregation Guidelines for a Class of Minimax and Covering Location Models

Facility location problems often involve movement between facilities to be located and customers/demand points, with distances between the two being important. For problems with many customers, demand point aggregation may be needed to obtain a computationally tractable model. Aggregation causes error, which should be kept small. We consider a class of minimax location models for which the aggregation may be viewed as a second‐order location problem, and use error bounds as aggregation error measures. We provide easily computed approximate “square root” formulas to assist in the aggregation process. The formulas establish that the law of diminishing returns applies when doing aggregation. Our approach can also facilitate aggregation decomposition for location problems involving multiple “separate” communities.