Location Choice

Much of the excitement around the North American Free Trade Agreement (NAFTA) has been generated by anticipations of a strongly foreign investment response. Nevertheless, the plethora of applied papers about the NAFTA have all either ignored DFI or kept it exogenous. In this paper we provide support, with empirical underpinning, for the anticipation of a strong DFI response; however this support is qualified by the demonstration that no such DFI response will be forthcoming unless the NAFTA is used to drastically reform the agriculture and services sectors in Mexico.

Imitation in location choice

Under the assumption of perfect competition, it is difficult to avoid the conclusion that abandoned properties and long undeveloped neighborhoods remain that way because they are unprofitable. In contrast, this paper introduces a model in which firms systematically overlook neighborhoods with little commercial activity because of a positive informational externality motivating later movers to condition choice of location on earlier movers’ locations. When this occurs, firms sometimes find it profitable to imitate early movers’ locations even though privately acquired information suggests locating elsewhere. The model facilitates normative analysis of imitation in location choice by explicitly quantifying losses in aggregate efficiency following a shift from centralized to decentralized regimes. The model provides a tool for investigating the hypothesis of inefficient lock-in as it relates to neighborhoods in U.S. urban centers that remain underutilized despite the presence of profitable business prospects.Imitation, Location, Ecological Rationality, Bounded Rationality, Lock-In, Neighborhood, Abandoned

Bilateral monopolies and location choice

We analyse how equilibrium locations in location-price games à la Hotelling are affected when firms acquire inputs through bilateral monopoly relations with suppliers. Assuming a duopoly downstream market, we consider the case of two independent input suppliers bargaining with both downstream firms. We find that the presence of input suppliers changes the locational incentives of downstream firms in several ways, compared with the case of exogenous production costs. Bargaining induces downstream firms to locate further apart, despite the fact that input prices increase with the distance between the firms. In the case of asymmetrical bargaining strengths, the downstream firm facing the stronger input supplier has a strategic advantage and locates closer to the market centre. Sequential location introduces a first-mover advantage which may be mitigated or reinforced, depending on whether or not it is the first mover that bargains with the stronger input supplier.Spatial competition; Location choice; Bilateral monopolies; Endogenous production costs.

Monopolistic Location Choice in Two-Sided Industries

We analyze the optimal location choice of a monopolistic firm that operates two platforms on a two-sided market. We show that the optimal platform locations are equivalent to the one-sided benchmark if both sides are either restricted to single- or multi-homing. In the mixed case (one side single-homes, the other one multi-homes), the optimal platform locations are determined by the relative profitability of both market sides. Our results indicate that modeling mergers on two-sided markets with fixed locations is often inappropriate

Location choice of SMEs

Onderzoek naar de vestigingsplaatskeuze van midden- en kleinbedrijven in commerciële diensten, industrie, groothandel en vervoer. In het onderzoek wordt verder onderscheid gemaakt naar nieuwe en bestaande bedrijven, omdat voor bestaande bedrijven andere motieven, zoals mobiliteit, een belangrijke rol kunnen spelen.

Methodological and empirical challenges in modelling residential location choices

The modelling of residential locations is a key element in land use and transport planning. There are significant empirical and methodological challenges inherent in such modelling, however, despite recent advances both in the availability of spatial datasets and in computational and choice modelling techniques. One of the most important of these challenges concerns spatial aggregation. The housing market is characterised by the fact that it offers spatially and functionally heterogeneous products; as a result, if residential alternatives are represented as aggregated spatial units (as in conventional residential location models), the variability of dwelling attributes is lost, which may limit the predictive ability and policy sensitivity of the model. This thesis presents a modelling framework for residential location choice that addresses three key challenges: (i) the development of models at the dwelling-unit level, (ii) the treatment of spatial structure effects in such dwelling-unit level models, and (iii) problems associated with estimation in such modelling frameworks in the absence of disaggregated dwelling unit supply data. The proposed framework is applied to the residential location choice context in London. Another important challenge in the modelling of residential locations is the choice set formation problem. Most models of residential location choices have been developed based on the assumption that households consider all available alternatives when they are making location choices. Due the high search costs associated with the housing market, however, and the limited capacity of households to process information, the validity of this assumption has been an on-going debate among researchers. There have been some attempts in the literature to incorporate the cognitive capacities of households within discrete choice models of residential location: for instance, by modelling households’ choice sets exogenously based on simplifying assumptions regarding their spatial search behaviour (e.g., an anchor-based search strategy) and their characteristics. By undertaking an empirical comparison of alternative models within the context of residential location choice in the Greater London area this thesis investigates the feasibility and practicality of applying deterministic choice set formation approaches to capture the underlying search process of households. The thesis also investigates the uncertainty of choice sets in residential location choice modelling and proposes a simplified probabilistic choice set formation approach to model choice sets and choices simultaneously. The dwelling-level modelling framework proposed in this research is practice-ready and can be used to estimate residential location choice models at the level of dwelling units without requiring independent and disaggregated dwelling supply data. The empirical comparison of alternative exogenous choice set formation approaches provides a guideline for modellers and land use planners to avoid inappropriate choice set formation approaches in practice. Finally, the proposed simplified choice set formation model can be applied to model the behaviour of households in online real estate environments.Open Acces

Location and organization choice of firms

We construct a two-region model of monopolistic competition with mobile entrepreneurs. Typical implicit assumption on increasing returns to scale sector is that firms can produce and sale only at one place. We explicitly introduce multi-plant case and examine location equilibrium with decreasing transpiration costs. The difference between single-plant and multi-plant firms lies in export-fixed cost and set-up fixed cost of multi-plant. We find that at certain transportation costs, firms change their organization type from multi-plant to single-plant and, with further decrease in transportation costs, firms concentrate in one region.Economic Integration, Organization of Production, Horizontal FDI, Export Fixed Cost, Transaction Cost

Modelling firm (re-)location choice in UrbanSim

Over the last decade, low economic growth rates resulted in intensified competition between nations, regions, and towns in trying to attract new firms and inhabitants. In particular, the establishment of new firms has become one of the most vital objectives of governments and public authorities all over Europe. To raise the attractiveness of a region, different instruments have been used: tax reductions, incentives for new establishments, as business destination promotion activities, supply of outstanding infrastructure and public services. On the one hand, this paper investigates effects of different possible options for cantonal and municipal authorities’ intent to attract firms: improvements in transport infrastructure, designation of new building zones, and last but not least tax reductions. These actions have been tested by simulating the decisions of existing firms. The parameters for these simulations have been estimated with a discrete choice model using data of the cantons St.Gallen and both Appenzell as well as Zurich. On the other hand, the paper aims to provide an approach to implement these models in UrbanSim. UrbanSim is a software-based simulation system for supporting planning and analysis of urban development, incorporating the interactions between land use, transportation, the economy, and the environment. At the moment, UrbanSim is adapted to an European context (see the according research project SustainCity, www.sustaincity.eu).

Dynamics of Heterogeneous Congestion Tolerance in the Location Choices of U.S. Gulf of Mexico Shrimp Fishermen

Location choice is one of the most important short-run decisions made by commercial fishermen. Previous studies of location choice by commercial fishermen have focused primarily on site fidelity, profit-maximization behavior, and risk attitudes as factors influencing their location choice behavior. Although the recreational literature gives extensive consideration to the influence of congestion on site selection, few studies have considered the influence of congestion tolerance on site selection in the commercial fishing sector. This study uses a mixed logit model to analyze the heterogeneous congestion tolerance in location choice among U.S. Gulf of Mexico shrimp fishermen. The dynamics of fishermen responses to economic conditions are compared and contrasted for two periods; the first period coinciding with relative economic stability in the industry and the second period coinciding with deteriorating economic conditions. Results suggest that congestion externalities have significant influence on the location choice of shrimp fishermen, but that congestion tolerance level differs among them. A better understanding of heterogeneous congestion tolerance should aid the implementation of management tools such as area closures.location choice, congestion, mixed logit, shrimp fishery, Resource /Energy Economics and Policy,