Abstract
The paper combines theoretical models of housing and business locations and shows that they have the same determinants. It evidences that classical, behavioural, new economic geography, evolutionary and co-evolutionary frameworks apply simultaneously, and one should consider them jointly when explaining urban structure. We use quantitative tools in a theory-guided factors induction approach to show the complexity of location models. The paper discusses and measures spatial phenomena as distance-decaying gradients, spatial discontinuities, densities, spillovers, spatial interactions, agglomerations, and as multimodal processes. We illustrate the theoretical discussion with an empirical case of interacting point-patterns for business, housing, and population. The analysis reveals strong links between housing valuation and business location and profitability, accompanied by the related spatial phenomena. It also shows that assumptions concerning unimodal spatial urban structure, the existence of rational maximisers, distance-decaying externalities, and a single pattern of behaviour, do not hold. Instead, the reality entails consideration of multimodality, a mixture of maximisers and satisfiers, incomplete information, appearance of spatial interactions, feed-back loops, as well as the existence of persistence of behaviour, with slow and costly adjustments of location.
Highlights
Despite the immensely large range of theories and empirical evidence in regional and urban studies, there are still very few explanations of the links between business and residential location within cities, with particular insight into firms’ profitability and housing valuation
We show that localisation models in classical, behavioural, new economic geography, evolutionary and co-evolutionary frameworks, should be considered jointly, as they each account for different phenomena included in the von Thünen, Loesch, Weber, Alchian, Alonso, Tiebout, Webber, Krugman, Boschma and Gong and Hassink models
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Summary
Despite the immensely large range of theories and empirical evidence in regional and urban studies, there are still very few explanations of the links between business and residential location within cities, with particular insight into firms’ profitability and housing valuation. Independent of the adopted research perspective and the decision-makers’ internal motivations, the final outcomes are the densities of business and housing and the spatial distribution of economic activity reflected in the prices of real estate and the profitability of businesses The intersection of both streams, business and housing location and valuation, lies in their similar spatial determinants, and the spatial consequences of both processes in terms of clustering, density, agglomeration externalities, central business district (CBD). Location, rural vs urban sites, accessibility, proximity to important neighbours, quality and usefulness of neighbourhoods, absolute and relative locations, local and global perspectives, spatial segregation, etc. Prestigious neighbourhoods of well-performing companies increase the price of real estate
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