Retail structural dynamics and the forces behind big-box retailing

Recent change on the American retail landscape warrants a revisit to the catastrophe framework originated by Harris and Wilson (1978). A retail revolution, centered around the growth of big-box retailing, is recreating metropolitan retail structure. Alterations to both the sizes and spatial distributions of retailers in nearly every sector have resulted. This research presents a theoretical inquiry into the forces behind this change through an adoption and extension of the catastrophe theory framework. Results suggest that changes in retail structure, though they have altered consumer behavior, are more attributable to changes in the cost structures of firms than to changes in the preferences of consumers. Received: June 2000/Accepted: December 2000     

Demand for information and communication technology-based services and regional economic development

The relationship between the uptake of Information and Communication Technology-based services (ICT) and regional economic development is examined here; we address in particular the idea that ICT will promote regional economic convergence. We argue that ICT can generate contradictory trends of regional convergence and divergence and that, under conditions of non-regulated market supply, the effects leading to divergence can be dominant. The approach is based on the development of a regional demand model, which is the combination of two sub models, one dealing with the effects of network externalities and the other based on the concept of potential demand for ICT. The main conclusion is that less populous, more peripheral and poorer regions with weaker existing social and economic networking will encounter problems of insufficient demand. This in turn will delay the launch of new services and slow the rate of uptake. Negative dynamic effects of low ICT use on economic performance will generate a vicious circle of cumulative disadvantage. Received: 2 October 2000 / Accepted: 6 December 2001 RID="*" ID="*" Thanks are due to Miguel Jardim and Jo?o Marques for technical assistance with the graphics.     

Estimating nodal attractions with exogenous spatial interaction and impedance data using the gravity model

Unlike the conventional calibration of a gravity model in which nodal attractions are treated exogenously, this study treats the attraction of a node as an endogenous composite indicator of many contributing factors associated with the node and estimates the nodal attraction based upon exogenous spatial interaction (flow) and impedance data. An algebraic method is developed for the general O-D matrix and applied to a hypothetical O-D flow case. A theoretical discussion of utilizing regression to estimate the contributing factors of nodal attractions is also presented. Received: 17 November 1995 / Accepted: 4 June 1998     

General equilibrium spatial models

This paper confirms the so called perverse effect of L?schian entry on wages regardless of the form of the labor supply curves. The form of our labor supply after firm entry is not only different from the one before entry, but also sharply different from that found by Kohlhase and Ohta [8]. However, we show that while the Kohlase-Ohta model has a convex labor supply, the Ohta-Asami-Kohlhase model has a concave labor supply as does the extended model presented here. Moreover, we find that the same perverse result is derived from either one of the two contrasting forms of the labor curve assumed, i.e., regardless of the convexity vs. concavity of the labor supply. Received: May 1999/Accepted: June 2000     

Explaining regional economic performance: An historical application of a dynamic multi-regional CGE model

A multi-regional dynamic computable general equilibrium model of the Australian economy (federal-f) is used to identify the causes of the divergent growth performance of two Australian regional economies (Tasmania and the rest of Australia) over the period 1992–1993 to 1998–1999. These causes are traced to a large number of structural and policy changes in the two economies. Ultimately, no simple or mono-causal explanation for the divergent growth experience is found – the relatively slow growth of the Tasmanian economy is the net effect of a large number of countervailing influences. Nevertheless, from among these many influences, it is possible to distinguish those that had a sizeable impact from those that had a negligible impact. Received: 29 February 2000 / Accepted: 31 July 2000     

Areas, nodes and networks: Some analytical considerations

This situation has been identified in the literature as the ‘self potential’ problem. In this article, integration over continuous space within the origin-destination zones is applied to not only compute the intrazonal flows more accurately, but also to evaluate the interzonal flows along shortest path routes meeting the interzonal links at efficient intermediate points. In particular, this general approach permits more accurate corrections to the conventional model, allowing, for instance, the usual approximations in determining average trip length to contiguous zones to be overcome. The eventual aim is to develop practical ‘rules of thumb’ for correcting the conventional analysis. This article also examines facility choice via alternative round trip routes, attempting to discern the influence of ‘intervening opportunities’ on the potential for multi-stop trips without having to fully identify the actual trip chain. Such intervening opportunities can only be properly considered along the alternative paths of the actual network. Received: 7 October 1998 / Accepted: 23 December 1998     

A multiple gap approach to spatial economics

In previous work investment and regional location have been analysed in terms of gaps or thresholds that should be closed or passed in order to produce operational results (growth, local development).  The topic is taken up again using a min-algebra which, at least to the knowledge of the author, has not yet be applied to (theoretical) spatial economics, though max-plus algebra has been used to tackle scheduling problems.  Examples of multiple gap situations will be given, together with their econometric implications; min-algebra will be defined, and examples of its applications worked out; topics for further research will be presented in conclusion. Received: October 2000/Accepted: September 2001     

Spatial competition with profit-maximising and labour-managed firms

The nature of the equilibria arising under spatial differentiation is investigated here in a duopoly model, where at least one firm maximises value added per worker. The study shows that if firms' objectives differ, there exists a subgame perfect equilibrium in pure strategies, which is possibly characterised by asymmetric locations. If both firms are labour-managed, there exists a (symmetric) subgame perfect equilibrium in pure strategies with firms located at the first and third quartiles, if and only if the setup cost is low enough. Otherwise, undercutting is profitable. Received: 16 March 2000 / Accepted: 15 March 2001     

Impacts of the development of large cities on economic growth and income distribution in Korea: A multiregional CGE model

A multiregional Computable General Equilibrium (CGE) model of Korea is used to assess urban development strategy in terms of national economic growth and income distribution. We find that the dispersion of total investment expenditure to six large cities would be the best policy if the emphasis of national development were to be placed on economic growth, together with a reduction in regional income disparity. Conversely, a heavy concentration of investment expenditure in Seoul and Pusan would lead to an amelioration of inequality in the distribution of personal income, but it would be difficult to implement due to hostility towards a primarily city-oriented value system. Received: 6 September 1999 / Accepted: 10 January 2002 RID="*" ID="*" An earlier version of this article was presented at the 16th Pacific Regional Science Conference held in Seoul, Korea, July 12–16, 1999.     

Production-location decision under duopoly with managerial incentives

The validity of the profit-maximizing assumption has long been doubted by many economists. One reason for the deviation from profit maximization that has been emphasized is the separation of ownership and management. This paper attempts to examine the spatial consequences of this separation under duopoly where managers compete in quantities, as in the Cournot model, and owners choose their managers' incentives and plant locations. A complete analysis, including the exclusion theorem, comparisons of optimal locations under the incentive equilibrium with those under profit-maximization, and comparative statics, is provided. It is demonstrated that the separation of ownership and management has significant implications for firms in relation to their location decisions. Received: October 2000/Accepted: August 2001     

Optimal search on spatial paths with recall,Part II: Computational procedures and examples

This is the second part of a two-part analysis of optimal spatial search begun in Harwitz et al. (1998). In the present article, two explicit computational procedures are developed for the optimal spatial search problem studied in Part I. The first uses reservation prices with continuous known distributions of prices and is illustrated for three stores. The second does not use reservation prices but assumes known discrete distributions. It is a numerical approximation to the first and also a tool for examining examples with larger numbers of stores. Received: 10 October 1996 / Accepted: 3 May 1999     

The insufficiency of Pigouvian taxes in a spatial general equilibrium model

The paper considers, in a spatial general equilibrium setting, the pollution externality problem caused by a competitive industry. It is shown that the pollution control instrument supporting the optimum is a two-part Pigouvian tax–emission rights scheme in which the polluter pays only for the emissions which exceed its initial emission rights. The optimal level of the emission rights depends on the nature of pollution. In the global pollution case they are zero, whereas in the local pollution case they are equal to the firm's emissions at the optimum. In general, the optimal initial emission rights are between these values, but they may also be negative. In the latter case the firm pays for a greater amount of emissions than it emits. The emission tax proceeds, if there are any, must be distributed to the victims (households) as compensation. Received: December 1998/Accepted: May 2000     

Measuring dynamic economic effects under the constant-technology versus varying-technology assumptions

This study measures the time-period-specific industrial price and output effects of cost-related variables (transportation cost, wage rate, and interest rate) by utilizing the Dynamic Variable Input-Output (VIO) model. The Dynamic Variable Input-Output (VIO) model extends the static single regional version of the MultiRegional Variable Input-Output (MRVIO) model which is a partial general equilibrium model that incorporates the input-output model.  By using the 15 sector industrial transaction table derived from the 1987 U.S. Benchmark input-output table for the constant-technology assumption case, and transaction tables derived from the 1987–1983 U.S. input-output tables for the varying-technology assumption case, we estimate cost-related variable effects on industrial price and output that are spread over several years. The dynamic price and output elasticities identify each period's impacts, and they add up to the static total price and output elasticities, respectively, when we adopt the constant-technology assumption. When we adopt the varying-technology assumption, each period's impacts do not add up to the neat dynamic totals. This study also finds that the initial period's price and output elasticities of the Dynamic VIO model are exactly the same as price and output elasticities of the static VIO model, thereby showing that the static VIO model underestimates the price and output impacts.  Empirical results show that price elasticities are all positive for both own and cross impacts. Empirical results also show that output elasticities are negative for own impacts but mixed in sign for cross impacts because of the substituting behavior of firms and consumers. The distributions of both price and output elasticities reveal that ripple effects vary among different industries, over different time periods, among the cost-related variables, and between the two different technology assumptions. The distributions of both price and output impacts are more apparent during the first four or five periods.  Hypotheses testings on the differences of mean elasticities between the two cases of technology assumptions show that under 10% level of significance, there are almost no differences in elasticities between the two cases of technology assumptions. However, as we increase the significance level, the total of five year periods' impacts show that they do differ under the two technology assumptions. Consequently, we recommend the use of constant technology for forecasting time horizons less than five years, and the use of varying-technology for forecasting time horizons longer than five years. Received: August 1998/Accepted: April 2000     

Hotelling's “Ice cream dealers” with elastic demand

This article reconsiders the Hotelling duopoly model of 1929, but under elastic demand, more precisely a linear demand function. The equilibrium state for identical firms is fully described, and the intervals of different regimes: independent monopolies, genuine duopoly competition, and price cutting wars, are specified in terms of one single compound parameter (maximum price, minus marginal production cost, divided by transportation cost). Received: October 2000/Accepted: August 2001     

Changing the economic landscape: The phenomenon of regional inversion in the US manufacturing sector

Regional inversion is the name given to the phenomenon whereby the traditional industrial areas of certain countries lose their weight in favor of what were formerly peripheral zones. Against this background our first objective is to offer a formal and rigorous definition of the concept of regional inversion from an econometric standpoint. To that end we relate such a process with the long-run concepts of convergence and catching-up. Secondly, we test this definition through the use of unit root statistics and apply these to demonstrate the presence of this phenomenon in some of the US two-digit SIC industries. Received: 4 December 2000 / Accepted: 20 August 2001 RID="*" ID="*" The authors would like to express their thanks to three anonymous referees for their helpful comments and observations on an earlier version of this article. Financial support from grants PB97-1028 and PB98-1614 of DGES is gratefully acknowledged.     

Price regulation in a spatial duopoly with possible non-buyers

If the price is regulated in a spatial duopoly where consumers have a finite upper bound as to the price they are willing to pay for the differentiated product, in most cases the Principle of Minimum Differentiation does not apply. Depending on the market structure firms either (i) form local monopolies, or (ii) differentiate intermediately, or (iii) agglomerate at the market centre. Minimum differentiation is never total-surplus-maximizing nor desired by firms. In most cases the regulator sets a price below that maximizing industry profits. For a substantial range of market configurations the regulated (first-best) price exceeds marginal cost. This induces firms to serve a larger part of the market. Received: February 1999/Accepted: September 2001     

An application of the Beckmann-Ingene argument to a monopsonist's spatial pricing problem

The purpose of this note is to show that an analogue of the Beckmann-Ingene proposition on price policies of a spatial monopolist applies to a properly formulated profit maximization problem for a spatial monopsonist. The proof of this fact uses the same linear transformation employed in the Beckmann-Ingene argument. Received: 15 October 1998 / Accepted: 9 January 1999     

Spatial markets and the potential for economic integration between Canadian and U.S. regions

The potential for further economic integration among Canadian and American regions is measured by comparing province-to-state trade with state-to-state trade, where the latter is used as a benchmark of integration. To accomplish this, an attraction constrained gravity model is derived from micro foundations and estimated. The analysis demonstrates that after controlling for variations in output, distance, wages, productivity, and localization economies, the border remains a significant barrier to trade, although much less than previous estimates of the border effect using internal Canadian trade as a benchmark. The model's results also indicate that the border's influence varies across sectors, and the influence appears to be, in part, related to the presence of tariff and non-tariff barriers. Received: 1 February 1999 / Accepted: 8 August 2000     

Voting with your feet in the United Kingdom: Using cross-migration rates to estimate relative living standards

This article reexamines and extends the literature on the use of migration rates to estimate compensating differentials as measures of regional quality of life. I estimate an interregional migration regression for the UK and use the results to measure regional quality of life and standard of living. The results suggest a North-South divide within England, and that Scotland and Wales have relatively high levels of both. The results also lead to a rejection of regional standard-of-living e quivalence (long-run regional equilibrium) in the UK. Received: August 1998 / Accepted: January 2000     

A bi-level programming model for the land use – network design problem

A sketch map in urban planning roughly lays out a physical plan. However, the process of generating sketches has long been viewed as a “black box”. The sketch layout model (SLM) was developed in 1999 to improve the efficiency and quality of layout tasks. This model is a nonlinear and multi-objective programming, for analyzing the integrated layouts of land uses, transport network and public facilities. Although the SLM had been developed for three phases and can be applied to real cases, the method still does not distinguish the types of roads in the transport network. This study develops the SLM-IV, a bi-level programming, by integrating the SLM-III and the combined trip distribution/assignment model, to generate a hierarchical network. This improved model can analyze travel demands, and then decide the link type of the network in SLM. A numerical example with relevant sensitivity analysis is presented to verify the operational feasibility and identify the model's characteristics. Received: June 2001/Accepted: June 2002 The authors would like to thank the referees and the editor for their helpful suggestions and assistance on the earlier version of the paper. This study was financially supported by the National Science Council in Taiwan (project no: NSC89-2415-H-009-001-SSS).