How inter-firm networks influence the development of agglomerations

Non-market interactions are increasingly regarded as key explanations for spatial concentration. Consistently, both innovation and local knowledge spillovers play a central role in recent theories of agglomeration. According to these theories, exchange of localised knowledge gives firms an innovative advantage which results in better economic performance. However, it has turned out to be difficult to open the black box of economies of scale using empirical tests.\ud Since interactions get considerable attention in recent agglomeration theory, social network methods and theory are promising approaches to research spatial agglomerations. Even more so because simultaneously, there is an increasing emphasis on interfirm ties in the network field.\ud The goal of our research is to explore how interfirm networks influence the development of agglomerations. Firstly we provide a review on network and innovation literature in the field of spatial clusters. Secondly, we discuss measurement issues related to networks and innovation and ways to overcome them. Finally, we present preliminary results of our network study among high tech firms in the Dutch region of Twente

Microeconomic Motives of Land Use Change in Coastal Zone Area: Agent Based Modelling Approach

Economic growth causes growing urbanization, extension of tourist sector, infrastructure and change of natural landscape. These processes of land use change attract even more attention if they take place in coastal zone area. In that case not only the efficient allocation and preservation of natural area, but also reduction of potential damage from flooding is important. Driven forces of land use at macro and micro levels should be taken into account. This paper presents an agent based model (ABM), which is designed to simulate land use change in coastal zone area based of human behaviour. The aim is to understand motives, types of connections and interactions between different actors and natural environment in order to get a feeling how different policy options and natural conditions might affect land use configuration. Microeconomic motives of land use decisions are in the focus of the research. Individual land use decisions are guided by economic and geomorphologic conditions, spatial planning and coastal protection policy. Each location choice is done according to a set of defined rules and land attributes. Space is represented as a grid of cells. Self-interested economic agents interact with each other trying to benefit from a certain type of land-use. We introduce the perception of risk of flooding in the model of land use as an innovative aspect of ABM simulations for water management problems. Based on decisions of spatially distributed individual economic agents operating in a policy framework, the model produces aggregated land-use patterns as an outcome. Understanding the factors that affect land use decisions will help policy makers design incentives to achieve policy objectives in coastal zone area. The proposed ABM will be applied to a study area in the province of North Holland in the Netherlands

Optimal Land Use and the Allocation of Endogenous Amenities

This paper explores the implications, from a public sector economics point of view, of combining welfare assessments concerning land use in urban and environmental economics respectively. Urban economics has a long tradition in determining the optimal allocation of land (or space) as a consumption good, while land use issues in environmental economics are predominantly rooted in hedonic pricing as a valuation method for optimising the allocation of public goods. Recently, hedonic pricing methods have been extended by adopting location choice models for the valuation of non-marginal changes in levels of local amenities. Following a possible revision of the location choices by the population, endogenous prices are introduced and compensated for in a willingness to pay. Some of the new methods also allow for social interactions by means of endogenous amenities. While endogenous prices are the main contribution of these so-called sorting models to the valuation literature, until now little attention has been paid to the efficiency of the market equilibrium assumed, in terms of the consumption of space. This is surprising, because social interactions as endogenous amenities might alternatively be interpreted as positive external effects. As such, they are likely to result in an oversupply of land in a competitive market. The dominant characterisation of the equilibrium on the land (or housing) market in sorting models is market clearing, given a fixed supply. In this paper, the total amount of land used in the market clearing equilibrium will be compared with the competitive market equilibrium and the allocation by a benevolent social planner maximising social welfare. It is shown that under relatively general conditions and allowing for endogenous amenities, market clearing with a fixed supply will yield a total amount of land used that is smaller than in a competitive market, but larger than in the case of land use planning. This result suggests that in public policy recommendations, sorting models could benefit from complementing the valuation methodology with the internalisation of external effects for optimising land use.

Welfare Economic Aspects of Land Use Planning

This paper develops a unifying framework for spatial and environmental economics, based on equilibrium considerations for population games. The main contribution of this paper consists of introducing a consistent concept for spatial welfare. Following the introduction of estimable locational sorting models for valuation methods in environmental economics, the relationship between the theoretical underpinnings of the hedonic pricing model and the bid rent concept in urban economics is re-examined. This is done along the definition of the ideal general equilibrium willingness to pay (GE-WTP) that is at the heart of most applications of locational sorting models in environmental economics. A GE-WTP should be able to account for the value of non-marginal changes in a spatially explicit distribution of local public goods. Commonly, such a GE-WTP is derived as a Hicksian WTP adjusted for endogenous prices. Endogenous prices are typically enforced by a market clearing condition, often a fixed supply, constraining the relocation of a population in response to the changes in local quality. This paper offers an alternative interpretation of a GE-WTP. It demonstrates how for a discrete choice formulation, a fixed supply generically results in a Nash equilibrium in a population game. Furthermore, it is shown that this Nash equilibrium corresponds exactly to a spatial equilibrium in urban economics. This observation allows for a novel spatially explicit approach to the evaluation of land policy options, combining current cost-benefit practice with the optimization of land use. Finally it is shown, how the GE-WTP can be adjusted for developers' decisions, based on the analogy with urban economic models. It allows this spatial welfare measure to be extended with endogenous, instead of fixed, supply. This makes the concept also suitable for comparing the social welfare implications of entirely different land use patterns.

Agent-Based Urban Land Markets: Agent's Pricing Behavior, Land Prices and Urban Land Use Change

We present a new bilateral agent-based land market model, which moves beyond previous work by explicitly modeling behavioral drivers of land-market transactions on both the buyer and seller sides; formation of bid prices (of buyers) and ask prices (of sellers); and the relative division of the gains from trade from the market transactions. We analyze model output using a series of macro-scale economic and landscape pattern measures, including land rent gradients estimated using simple regression models. We first demonstrate that our model replicates relevant theoretical results of the traditional Alonso/Von Thünen model (structural validation). We then explore how urban morphology and land rents change as the relative market power of buyers and sellers changes (i.e., we move from a 'sellers' market' to a 'buyers' market'). We demonstrate that these strategic price dynamics have differential effects on land rents, but both lead to increased urban expansion

Introducing Preference Heterogeneity into a Monocentric Urban Model: an Agent-Based Land Market Model

This paper presents an agent-based urban land market model. We first replace the centralized price determination mechanism of the monocentric urban market model with a series of bilateral trades distributed in space and time. We then run the model for agents with heterogeneous preferences for location. Model output is analyzed using a series of macro-scale economic and landscape pattern measures, including land rent gradients estimated using simple regression. We demonstrate that heterogeneity in preference for proximity alone is sufficient to generate urban expansion and that information on agent heterogeneity is needed to fully explain land rent variation over space. Our agent-based land market model serves as computational laboratory that may improve our understanding of the processes generating patterns observed in real-world data

Agent-Based Urban Land Markets: Agent\'s Pricing Behavior, Land Prices and Urban Land Use Change

We present a new bilateral agent-based land market model, which moves beyond previous work by explicitly modeling behavioral drivers of land-market transactions on both the buyer and seller side; formation of bid prices (of buyers) and ask prices (of sellers); and the relative division of the gains from trade from the market transactions. We analyze model output using a series of macro-scale economic and landscape pattern measures, including land rent gradients estimated using simple regression models. We first demonstrate that our model replicates relevant theoretical results of the traditional Alonso/Von Th�nen model (structural validation). We then explore how urban morphology and land rents change as the relative market power of buyers and sellers changes (i.e., we move from a \'sellers\' market\' to a \'buyers\' market\'). We demonstrate that these strategic price dynamics have differential effects on land rents, but both lead to increased urban expansion.Location Choice, Urban Land Market, Agent-Based Computational Economics, Land Use, Land Rent Gradient, Spatial Simulation

Welfare Economic Aspects of Land Use Planning

This paper develops a unifying framework for spatial and environmental economics, based on equilibrium considerations for population games. The main contribution of this paper consists of introducing a consistent concept for spatial welfare. Following the introduction of estimable locational sorting models for valuation methods in environmental economics, the relationship between the theoretical underpinnings of the hedonic pricing model and the bid rent concept in urban economics is re-examined. This is done along the definition of the ideal general equilibrium willingness to pay (GE-WTP) that is at the heart of most applications of locational sorting models in environmental economics. A GE-WTP should be able to account for the value of non-marginal changes in a spatially explicit distribution of local public goods. Commonly, such a GE-WTP is derived as a Hicksian WTP adjusted for endogenous prices. Endogenous prices are typically enforced by a market clearing condition, often a fixed supply, constraining the relocation of a population in response to the changes in local quality. This paper offers an alternative interpretation of a GE-WTP. It demonstrates how for a discrete choice formulation, a fixed supply generically results in a Nash equilibrium in a population game. Furthermore, it is shown that this Nash equilibrium corresponds exactly to a spatial equilibrium in urban economics. This observation allows for a novel spatially explicit approach to the evaluation of land policy options, combining current cost-benefit practice with the optimization of land use. Finally it is shown, how the GE-WTP can be adjusted for developers' decisions, based on the analogy with urban economic models. It allows this spatial welfare measure to be extended with endogenous, instead of fixed, supply. This makes the concept also suitable for comparing the social welfare implications of entirely different land use patterns