Spatial Risk and Return Relationships: A Reconsideration: Comment

Abstract

Professors McEnally and Tavis (M-T) in their recent article in this Journal' attempt to reappraise critically the spatial risk concept and show that its relevance is limited; they also find the relationship between spatial risks and realized returns to be simply a consequence of varying levels of competitiveness among industries. Unfortunately, the article is inconsistent, confusing, and is methodologically weak. This comment is divided into two principal parts: a treatment of alternative measures of risk, and a treatment of risk returns, and intra-industry competition.