Incentive consistency and the choice of a spatial pricing mode

This paper extends Gronberg and Meyer’s results (1981 21:541–549) and studies the problem that occurs when transportation costs are different between a firm and consumers: The firm (based on a profit-maximizing consideration) may adopt discriminatory pricing with an inefficient transport mode. This inefficient pricing behavior may not be consistent with the social optimum, whereby the problem of incentive inconsistency thus occurs. When dealing with endogenous pricing modes having asymmetric transportation costs, one should pay more attention to the distortion caused by the inconsistency problem.

Regional variations in the price of building land: a spatial econometrics approach for West Germany

In this paper, we analyze the enormous variation in the price of building land across West German regions. We outline a theoretical model that ties a household’s willingness to pay for building land to the inter-temporal value of employment. Using data for NUTS 3 regions the theoretically derived impact of labor market variables and other influences is investigated. We show that spatial dependence through spatially lagged variables plays a crucial role. According to our findings, the variation in the price of building land can be explained reasonably well if one adequately takes into account the specific patterns of spatial interaction.     

The identification of functional regions: theory, methods, and applications

A functional region is characterised by a high frequency of intra-regional interaction. The text analyses how functional regions can be identified by using labour market data. Three approaches are applied in this task, named the local labour market, commuting zone, and accessibility approach, respectively. The text includes an application using the Fyrstad region. The situation is also studied at two points in time. The outcomes using the different approaches are compared, and the results combined have a richer flavour.

Cost differentials and mixed strategy equilibria in a Hotelling model

We introduce heterogeneity of production costs into the location-price Hotelling model discussed by d’Aspremont et al. (Econometrica 47:1145–1150, 1979). Maximum differentiation appears if the cost difference between two firms is small, whereas no pure strategy equilibrium exists if it is large. We examine the mixed strategy equilibria when no pure strategy equilibrium exists. We find that the following simple symmetric mixed strategy equilibrium exists, which never becomes an equilibrium if no cost differential exists: each firm chooses to locate at the two edges of the linear city randomly.     

Quality of life in the regions: results for German Counties

In order to assess differences in living conditions across German regions we apply the hedonic approach of Rosen (Current issues in urban economics, 1979) and Roback (J Polit Econ 90(6):1257–1278, 1982) to land-price and wage differences across Germany’s counties. Employing a recent survey of more than half a million Germans on a wide range of social and political issues we confirm that differences in amenities give rise to substantial differences in land prices. With regard to wages, however, we find only little effects of amenities. Relying on the land-price effects we assess the quality of life in each of the German counties and provide a comprehensive ranking.     

Influence of highway construction projects on economic development: an empirical assessment

The evaluation of transportation projects has traditionally been made by assessing changes in travel time, vehicle operating cost, and safety. The broader, long-term effects on economic development (job, income and business growth) are a concern of transportation planners and decision makers, but have often been overlooked due to the lack of a reliable impact-estimation methodology and/or data. This paper presents a quantitative tool that can be used at the project-development phase to estimate the economic-development impacts of different types of highway construction projects. Using data from Indiana, we develop models that can be used to estimate the effects of geographic location, accessibility, and other factors on the economic-development impacts of highway construction projects. Our models can also be used as a basis for programming and ranking a wide variety of highway construction projects.     

Regional economic instability: the role of industrial diversification and spatial spillovers

Within regional science there has been a long history of interest in the relationship between economic instability and regional diversification. Despite this interest there are many unresolved issues in the literature, and while regional economic theory suggests that greater diversity will make regional economies more stable, the evidence is far less convincing. In addition, very little is known about how other variables affect the level of instability experienced by regional economies. This paper intends to clarify some of these points, with developments in the field of spatial data analysis meaning that additional insights may be gathered using these techniques. The analysis uses data from the 125 Local Government Areas of Queensland, a state economy of Australia that consists of many types of regions, ranging from densely settled urban centres to sparsely settled rural regions.

Spatial price competition in retail gasoline markets: evidence from Austria

This paper investigates the influence of unbranded stations on the prices charged by branded stations in the retail gasoline sector, using data on 400 stations in Lower Austria. As the market is characterized by spatial competition, a spatial lag model is used to avoid misspecification. The results show that independent retailers generally heighten price competition, as they charge significantly lower prices. At the same time, as consumers might consider gasoline sold at unbranded stations to be inferior, they also reduce price competition for branded stations. Independents therefore ultimately have only a small influence on the prices charged by branded stations.     

Household diversity and market segmentation within a single neighborhood

Housing hedonic studies typically assume that individuals or households are similar enough to aggregate into a single demand equation for analysis, usually relying on ordinary least squares (OLS) or some other single-line equation estimator. Diversity itself is managed by non-spherical disturbance corrections, typically spatial autocorrelation or heteroskedasticity in the single line OLS estimate. This paper tests whether households in the same neighborhood can be theoretically and empirically treated as a single type or if households can be assigned into more than one type; multiple types suggests distinguishable local housing sub-markets. Our technique, a combination of the method of principal components and the seemingly unrelated regression (SUR) model, allows for one or more demand curves to represent housing demand and allows several types to compete over a fixed housing stock in a given residential neighborhood. As such, the SUR is the empirical translation of a theory that different household types can coexist in the same neighborhood.

Rental housing and crime: the role of property ownership and management

This study examines how residential rental property ownership characteristics affect crime. It examines the incidence and frequency of disturbances, assaults, and drug possession and distribution using police incident report data for privately owned rental properties. Results show that a small percentage of rental properties generate incident reports. Count model regressions indicate that the distance the owner resides from the rental property, size of rental property holdings, tenant Section 8 voucher use, and neighborhood owner-occupied housing rates are associated with reported violations. The study concludes with recommendations about local government policies that could help to reduce crime in rental housing.     

Sequencing and scheduling highway network expansion using a discrete network design model

The motive behind this paper is to produce an NDP model that prescribes the final shape of a transportation network and the sequence and schedule of facility construction during the planning span as well. The proposed bi-level NDP model fills the gap between existing NDP models and practitioners’ needs because, in practice, planners have to select investment projects on a year-by-year basis. Conversely, existing models suggest only the optimal network configuration for a planning horizon. A genetic algorithm and a simulated annealing algorithm are proposed along with an exhaustive search algorithm as solution algorithms. Testing these algorithms with an example problem revealed that the simulated annealing worked superiorly to the genetic algorithm. The paper also demonstrates that the model is applicable to a real world problem by showing that the computational time needed to solve the example problem is not prohibitively large.     

Regional price levels and the agglomeration wage differential in western Germany

We analyse whether wage differences between cities and rural areas in western Germany are due to unobserved differences in regional price levels. Since regional prices are available for only 10% of the regions we use multiple imputation to generate prices for all regions. Our results show that the nominal agglomeration wage differential is 25%, whereas the real differential is 19%. If we control for the composition of the labour force and jobs, the real wage differential is 4%. If we additionally control for differences in regional building land prices the agglomeration wage differential vanishes.     

Redispersion is different from dispersion: spatial economy of multiple industries

In the literature of new economic geography, it is observed that the manufacturing sector disperses because of high transportation costs, agglomerates for intermediate transportation costs, and redisperses for low transportation costs. This paper examines a model with multiple manufacturing industries and finds that the redispersion process is different from the dispersion process. More precisely, there is at most one industry that disperses in the redispersion process while all industries disperse in the dispersion process. Furthermore, it is shown that the interaction of demand, increasing returns, and transportation costs is enough to derive a separating equilibrium where at least two industries agglomerate in different regions.

The spatial distribution of inventor networks

Inventor networking has become both more feasible with improved telecommunication and more important as it usually produces research of higher quality. Despite overwhelming evidence on the benefits of collaboration, patent data from 1994 to 2001 in Sweden demonstrate that inventor networks are not very common. Moreover, the spatial distribution of inventor networks is not uniform. It appears that agglomeration measured both as employment density and as industry diversity, plays a role in explaining networking. Our results indicate that inventor networks are more likely to exist in densely populated areas with a diversified industry. Market size has a negative impact on networking in that we can observe that inventor networks are less common in large metropolitan areas, ceteris paribus. Hence, it supports the proposition that networking can act as a substitute to agglomeration. Our results also suggest that researchers in dense areas will not only collaborate more; they will also collaborate over longer distance.     

Innovation and regional absorptive capacity: the labour market dimension

In 2003, Eurostat published an ‘experimental’ dataset on regional innovation levels derived from the Second Community Innovation Survey. This dataset, part of the European Innovation Scoreboard, also contains a range of regional labour market indicators. In this paper, we report an exploratory analysis of this data, focussing on how the labour market characteristics of regions shape regions’ absorptive capacity (RACAP) and their ability to assimilate knowledge from public and externally conducted R&D. In particular, we aim to establish whether labour market aspects of RACAP are more important for innovation in prosperous or lagging regions of the European Union (EU).

The knowledge production–regional economic growth complex: a framework and topics for future research

This note presents an introduction and framework for the papers that make up the special issue. In addition, it makes some suggestions for future research.

The geography of collaborative knowledge production in Europe

We analyse inter-regional research collaboration as measured by scientific publications and patents with multiple addresses, covering 1316 NUTS3 regions in 29 European countries. The estimates of gravity equations show the effects of geographical and institutional distance on research collaboration. We also find evidence for the existence of elite structures between excellence regions and between capital regions. The results suggest that current EU science policy to stimulate research collaboration is legitimate, but doubt the compatibility between EU science policy and EU cohesion policy.     

Regional economics in its 1950s: recent theoretical directions and future challenges

Regional economics has just entered in its 1950s. It is a young discipline compared to other branches of the economy, yet much work has been done in this field. A vast and rich number of theoretical and methodological approaches exists nowadays to incorporate space into logical schemes, laws and models which regulate and interpret the formation of prices, demand, productive capacity, levels of output and development, growth rates, and the distribution of income in conditions of unequal regional endowments of resources. This contribution provides the state of the art in Regional Economics with the aim to highlight the scientific achievements obtained so far and the theoretical and methodological gaps which still need to be filled out. Aspects that run counter to general beliefs emerge by reading the original contributions of wellknown theoreticians, and will be presented. Future challenges will emerge from a critical approach to the milestones achieved so far. This paper is at the basis of a keynote lecture given at the 46° ERSA Conference, held in Volos, 30 August–3 September 2006.     

Public investment in transportation infrastructures and regional asymmetries in Portugal

The objective of this paper is to investigate the regional incidence of the effects of public investment in transportation infrastructures in Portugal. Our methodological approach consists of estimating vector autoregressive (VAR) models for the national economy as well as for each of the five administrative regions in the country. In the regional models, both public investment in transportation infrastructures in the region and public investment in transportation infrastructures elsewhere are considered, thereby taking into consideration the potential existence of regional spillovers. Empirical results suggest that although public investment in transportation infrastructures has been a powerful instrument to promote long-term growth, it does so in a way that is rather unbalanced across regions. We show that public investment in transportation infrastructures has markedly contributed to the concentration of economic activity in Lisbon, the largest region in the country, and therefore has contributed markedly to the macrocephaly of the country.

The spillover effects of public capital on the Turkish private manufacturing industries in the geographical regions

This paper investigates the spillover effects of public capital formation on the Turkish private manufacturing industry at the regional level over the period 1980–2000. The aggregate effects of public capital cannot be captured entirely from the direct effects of public capital installed in the region itself. Spillovers are also an integral part of the regional impact of public capital installed in the outside of the region. Therefore, we estimate the dynamic effects of public capital using VAR models for the seven regions of Turkey by including capital formation installed outside of the region. The results show that direct effects of public capital are positive in some regions, while indirect effects of public capital are positive in most regions. A previous version of this study was presented at the METU/ERC International Conference in Economics VII, 6–9 September 2003, Ankara, Turkey.