Location,agglomeration and infrastructure

In this article we discuss the relationships between transportation infrastructure, firm location, agglomeration and regional development. We will argue that the spatial transaction costs faced by modern firms have changed over recent decades, and that this has changed the ways in which transportation infrastructure contributes to form location behaviour and regional economic development. Therefore, in order to analyse these issues, it is necessary to consider the spatial transaction costs faced by modern firms and to investigate the conditions under which reductions in these costs due to infrastructure improvements will allow firms to move. These complex relationships are seen to be mediated via different geography-firm-organisation structures and consideration of these is essential for any realistic evaluation of the role of transportation infrastructure.JEL Classification: D21, D23, L1, R12, R3     

Voting for highway construction in economic geography

This paper investigates the efficiency of voting for provision of transportation infrastructure such as highways, and discusses the effect on regional structure. The salient conclusions of this study show that voting and political competition engender overprovision of large-scale transportation infrastructure. In addition, consideration of industrial location reveals that the provision of transportation infrastructure exerts a negative effect on development of rural areas.     

Models of spatial competition: A critical review*

This critical review focuses on the development of spatial competition models à la Hotelling in which the location choice of firms plays a major role. We start by quantifying the research in this field by using bibliometric tools. Thereafter, this study identifies the main research paths within spatial competition modelling. Specifically, the type of strategy (Bertrand vs. Cournot competition), the assumptions that are made in respect to the market (linear vs. circular), production costs, transportation costs, the number of firms and the type of information (complete vs. incomplete) and their effects on the location equilibria are also discussed.     

The evolution of regional multi-pole growth

Regional multi-pole growth is an important spatial form of regional economic organization pattern. We construct a model of regional multi-pole growth evolution to study its mechanism based on the assumption of heterogeneous space and inseparability of the economic subject. The study concludes that the evolution of regional multi-pole growth is affected by factors such as transportation costs, economies of scale, the crowding-out effect, and the factor endowments of superior location and inferior location. Based on the condition that the factor endowment of a location remains the same, with an increased economy of scale effect and a decline in the marginal production cost advantage, location will strengthen the agglomeration layout, which does not help form regional multi-pole growth patterns. With an increase of the crowding-out effect and a decline in the marginal production cost disadvantage, location will strengthen the dispersed layout, which fosters the formation of the regional multi-pole growth pattern. When transportation costs are high, a decline in such costs strengthens the links among locations, fostering the evolution of the regional spatial organization form to shift from dispersion to agglomeration. However, when transportation costs are somewhat reduced, their further reduction leads the regional spatial organization pattern into dispersion. Therefore, under certain conditions and with a decline in transportation costs, regional multi-pole growth weakens first and then strengthens.     

Financing road infrastructure by savings in congestion costs: A CGE analysis

Division of labor, outsourcing in manufacturing and just-in-time production require the provision of a good and sufficient road infrastructure system. The society is used to mobility, preference for it even increases, and the full benefit of competition can only be realized if special distances can be overcome at low cost of transportation. Since the 1970's, however, the negative aspects of an intensive extension of road infrastructure has dominated the political decision process in Germany.  The objective of this paper is to model the aspects of bottlenecks in road infrastructure, of congestion costs and of the effect of investment in infrastructure in a computable general equilibrium framework. A long-run “business as usual” simulation will show how congestion and its cost will develop over time. The increasing costs of congestion indicate a necessity to act. We will therefore raise the fuel tax to partly finance infrastructure investment. We will then compare the cost of the addition in infrastructure with the savings in congestion costs in order to see whether this policy measure is self-financing. Received: April 2000/Accepted: August 2001     

Spatial price discrimination in a symmetric barbell model: Bertrand vs. Cournot

This paper investigates the theory of spatial discrimination for general demands and general transportation costs in a barbell model, where markets' locations are assumed to be at opposite endpoints of a line. Duopoly firms in the Bertrand model always differentiate maximally, whereas in the Cournot model the market demand structure is not so critical, but the functional form of the transportation cost plays a crucial role in determining equilibrium location. Non‐maximal distance appears in the Cournot equilibrium when a convex transportation cost is allowed, bringing about the findings that the equilibrium consumer surplus may be higher and the equilibrium profits may be lower under Cournot competition than under Bertrand competition.     

Modelling residential location choice in an area with spatial barriers

A model is presented for residential location choice in rural areas with spatial barriers. We address the problem through comparative static analysis focusing on how residential location choices are affected by a new road link across the spatial barrier. We proceed through a probability theoretical approach: choose a family of utility functions representing every possible location, and equip this family with a probability measure. Then choose a representative within an equivalence class of utility functions, and represent the probability distribution by a parametrized family of distributions. Our analysis demonstrates that investments in new road links do not necessarily represent an adequate instrument for achieving ambitions in regional policy. We identify reasonable situations where a new road link could just as easily generate net migration from the area in which the investments are directed. In general, our analysis demonstrates how agglomeration and centralisation tendencies can be considerably affected by transportation infrastructure innovations. Received: June 1999/Accepted: June 2001 This paper benefited from comments by Bj?rn Sandvik and Lars-G?ran Mattsson.     

Spatial competition and flexible manufacturing with spatially discriminatory pricing

This paper develops a two-dimensional spatial framework, in which firms have the technique of flexible manufacturing and engage in spatially discriminatory pricing, in order to explore the firms’ optimal locations and optimal attributes of basic products under linear transportation costs. The paper shows that the two firms will agglomerate at the center of the location line and the optimal attributes of the two basic products will be located at the first and third quartiles of the attribute line, respectively, when the ratio of the marginal modification rate to the transport rate is high. It also shows that the two firms will locate separately on the location line and that the optimal attributes of the two basic products will remain at the first and third quartiles, when this ratio is moderate. Moreover, this paper proves that the two firms will locate at the first and third quartiles of the location line, respectively, and that the attributes of the basic products will agglomerate at the center of the attribute line, when this ratio is low.     

Public surface transportation and regional output: A spatial panel approach

This paper studies regional impact of three mature public surface transportation infrastructures in the Northeast corridor of the US: highway, public railway and public transit. Infrastructure stock is valued in real terms from 1991 to 2009. A spatial panel approach with fixed effects is adopted to test the hypothesis of spillovers by allowing for spatial dependence. The result shows that public surface transportation infrastructure in general does have a significant impact on regional output, most of which is from spillover effect; highways have an overwhelming influence through both local effects and spillover effects. The impacts from public railway and public transit are not significant, but transit does show a positive though small spillover effect.     

Spatial economic networks with multicriteria producers and consumers: Statics and dynamics

In this paper, we develop a framework for the formulation, analysis, and computation of solutions to spatial network problems in which the firms are multicriteria decision-makers and the consumers are as well. In particular, the firms, which are involved in the production of a homogeneous commodity, are spatially separated and weight the two criteria of profit maximization and total output maximization in distinct fashion. They are faced with the selection of modes/routes (which are modeled in an aggregated manner) to transport the commodity to the demand markets where consumers, consisting of different classes, consider the price charged by the producers and weight the transportation cost and the transportation time of the product on the links in an individual manner. We derive the governing equilibrium conditions and present the variational inequality formulation. We provide qualitative properties of the equilibrium commodity shipment and generalized price pattern and then propose a tatonnement process, which we formulate as a projected dynamical system. We give an algorithm for computational purposes and apply it to several numerical examples for illustration purposes. This paper is the first to integrate multicriteria decision-making on the production side and on the consumption side in a basic network context. Received: February 2001/Accepted: August 2001     

The spatial distribution of new technology-based firms: Empirical results for West-Germany

The focus of the article is to shed some more light on the spatial distribution of new technology-based firms (NTBF) and to discuss location factors which may contribute to the explanation of the variation in the incidence of NTBF between the West-German districts (“Kreise”). Based on theoretical models explaining the location decisions of new firms, hypotheses are derived and tested in an empirical model. The regression results indicate strong correlations between the occurrence of NTBF and the proximity to Research and Development (R&D) facilities comprising universities, technical colleges and non-university institutes as well as private R&D. As expected, the impact of the various facilities varies with respect to their field of specialization, showing major positive correlations with respect to technical disciplines. Moreover, the estimates reveal out differences due to spatial characteristics such as infrastructure and other structural factors. Received: 26 April 1999 / Accepted: 28 November 1999     

The Brexit game: uncertainty and location decision

This paper aims to analyse firms' location decisions when faced with Brexit. We combine evolutionary game theory and spatial agent-based simulation approaches with input–output analysis to evaluate two different sectors: (i) crop and animal production; (ii) financial service activities. We separate the European Union in manifold regions and consider the following factors in the decision making: (i) market potential; (ii) productive integration; (iii) labour costs and (iv) displacement cost. Firms assign weights to each of these factors. Our results suggest that in traditional sectors firms tend to seek unsaturated markets. In sectors related to services, the greater the uncertainty, the greater the likelihood that firms will move.     

Hierarchies of cities and the spatial filtering of industrial development

ABSTRACT The spatial division of labor and external economics associated with the nation's hierarchical system of cities are postulated to be part of the process involved in the spatial filtering of industrial development. In this process high labor costs in metropolitan areas cause less competitive industries to restructure their operations or be priced out of the larger labor markets. The industries priced out of the markets locate all or some of their operations in smaller settlements in more distant areas where labor costs are lower, given sufficient external economics. The research supports this general proposition but reveals differences based upon the types of industries and the location of their headquarter facilities. It also reveals significant differences in the locational patterns and site selection criteria of different types of plants established by local, national and foreign firms; these differences foster the development of spatially bifurcated or dual labor markets that are associated with regional city size distributions.     

Trade infrastructure and firm location under Cournot competition

In a two-country four-region setting, this paper analyzes the impact of trade infrastructure on firm locations when they interact weakly in Cournot competition, and capital is perfectly footloose. Trade infrastructure costs are additive in firm production and countries differ in their quality of domestic infrastructure. We show that there is a magnified impact of initial infrastructure difference on firm location choices whenever the market is more integrated internationally or within each country. Trade liberalization promotes regional dispersion in the country with better infrastructure. For the country with poor infrastructure, given the presence of a magnified infrastructure disadvantage, unilateral domestic market integration does not necessarily result in an inflow of firms.     

Spatial analysis of the relationship between housing values and investments in transportation infrastructure

The relationship between residential location, location value and accessibility has been of long interest to regional scientists. Studies investigating the relationship between house price and changes in accessibility, however, have been fewer in number, and predominantly have centered upon the house price impact of fixed rail investments. Neglected have been the impacts of smaller road investments made on a regular basis by municipalities and state departments of transportation. This research therefore reports on the spatial relationship between house price and investment in road-based transportation infrastructure by combining two spatial databases, both centered on Columbus, OH. The first contains information on all single-family detached houses sold in 1990. The second contains detailed spatial and temporal information on all accessibility-changing road investments in the same area, since 1978. Results indicate that while moderate, past, current and approved (but not begun) road investments have distinct and significant impacts on house price.An earlier version of this paper was presented at the 40th Annual Meeting of the Western Regional Science Association in Palm Springs, California, February 2001, and was awarded The Charles M. Tiebout Prize in Regional Science. Randall Jackson, Morton OKelly, W. Randy Smith, Donald Haurin, Frank Mittlebach, the editor and an anonymous reviewer all provided valuable comments on previous drafts. Research funding was provided by the E. Willard and Ruby S. Miller Fellowship and through the Committee on Urban Affairs at Ohio State.Received: March 2001/Accepted: November 2003     

A combined distribution and assignment model for continuous facility location problem

Consider a general, heterogeneous geographical space with a set of competitive facilities, where the customers' demand locations from each of the facilities are continuously dispersed over the area. The total demand generated from a particular location in the space is fixed, but the demands from this location to the set of competitive facilities are subject to a distribution function with respect to the relative transportation costs to these facilities. Furthermore, we take into account congested transportation cost in characterizing customer choices. Congestion effect is explicitly built into our model by using a flow-dependent and location-dependent transportation cost function. The routing behavior of customers over the space and the user equilibrium choices of facilities are modeled by constructing a spatial user equilibrium flow pattern. The problem is formulated as a combined distribution and assignment model. An iterative algorithm between the distribution function for the choice of facilities and a mixed finite element method for route choices is proposed to solve the resulting continuous facility location problem. A numerical example is given to demonstrate the effectiveness of the proposed methodology. Received: May 1999/Accepted: May 2000     

The sequential location of knowledge-oriented firms over time and space

An analytical framework for the spatial and sequential decision processes of knowledge-oriented firms is presented, in which each firm is oligopolistically competing with other firms on the basis of inventive activities. The location behavior of new entrants is described as a two-stage decision process: (a) choosing the region in which to produce, and (b) determining the optimal level of output and the combination of inputs to produce. A hierarchical game-like framework is an essential part of the model. Both timing and intensity are major decision variables for the public provision of knowledge infrastructure. Numerical examples illustrate some implications for knowledge-based regional development policies.An earlier version of this paper was presented at the 30th European Congress, Istanbul, August 1990.     

Infrastructure and regional growth,growth dynamics and policy relevance for India

The role of infrastructure in economic growth has been the subject of considerable research in the fields of public policy, economics, and planning. In this paper, I examine the contribution of publicly supplied infrastructure to sub national regional growth in India. I first develop and numerically examine a regionally disaggregated model of economic growth to understand the dynamics of private capital and public infrastructure. For the empirical analysis, I use a pooled data set for Indian states to examine if publicly supplied infrastructure is a significant determinant of regional growth and whether there are spatial variations in the productivity effects of infrastructure. The main findings are that transport and communications infrastructure expenditures are significant determinants of regional growth, and the positive benefits accruing from these expenditures come not only from investments made by individual states, but there are positive externalities from network expenditures made by neighboring states. Finally, the out of sample simulated regional growth predictions show divergence in private capital formation between lagging and leading states. The findings, interpretations, and conclusions are entirely those of the authors, and do not necessarily represent the views of the World Bank, its executive directors, or the countries they represent.     

从古代丝绸之路到当代“一带一路”：交通建设带动区域发展的不同认知（英文）

As an important connection between the West and the East,the Silk Road has greatly promoted the cooperation between countries and regions.Transportation infrastructure plays a key role in the economic development and cultural exchanges,which has promoted the development of regions and cities along the Silk Road.Based on previous literature,combining the comparative advantage theory in economics with the transportation corridor and regional development theory,this paper divides the evolution of the Silk Road into three historical periods,and explores the economic motives for the development from the ancient Silk Road to the contemporary Belt and Road,as well as the impacts of transportation construction on the regional and urban development along the Belt and Road.The paper concludes that transportation infrastructure has a positive impact on the development of regions along the Belt and Road,which also influences the rise and fall of cities along the road.The paper comprehensively applies the theory of the comparative advantage and the theory of transportation and regional development,and proposes that economical mutual benefit and integration of transportation construction and regional development will play a key role in the implementation of the Belt and Road Initiative.     

On the supply of network infrastructure

The relationship between transport infrastructure and regional development is not monocausal. In addition to the causal link between infrastructure and regional development there is also a reverse link from regional development to infrastructure investments. In the present paper we investigate the latter relationship at the interregional level. A number of factors having an impact on infrastructure supply is formulated including regional and interregional demand, construction costs, financing possibilities, regional policies and border effects. An empirical study is carried out for the supply of railways and highways in a set of regions in the EU. It is found that most of these factors indeed have a significant impact on infrastructure supply. No significant result could be found, however, for regional policies. Also, at a broad spatial level, no indications are found that border regions are suffering from a lack of infrastructure supply.