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Abstract
This study estimates a theoretical multi-region industrial location model by adopting real statistics to investigate the intuition of shaping spatial pattern of economic activities in a case of cement industry in Northwest China. Based on the estimation of key parameters, we simulate the impact of technological progress on variation of location. We find that, given trade cost, with technological progress, operating cost decreases, it is profitable for firms to expand sale range. In long term, technological progress would induce server spatial competition and promote further spatial concentration of industry. Original areas with larger market and fine industrial base are still main agglomerations, while original peripheral areas are further to a downward trend, and parts of original areas located next to hot pot areas have become peripheries. Our study on influence of technological progress on industrial location confirms the importance of investigation on intuition of spatial pattern of economic activities. Technological progress is essentially achievement of sustainable development. However, neglecting substantial spatial competition induced by technology improvement turns against spatial allocation of resources. Hence, optimal location of industries is one of important factors to ensure sustainable development.
Highlights
Industrial location is the projection of economic activities on the territory
We evaluate technological progress of cement industry based on investigation of cement firms of Pingliang, Gansu Province, where locate two large corporations, Hailuo and Qilianshan, the former is representative of China’s cement industry, which represents the highest technological level in his domain; the latter was representative firms of local Northwest China
Based on the estimation of key parameters, we simulate the impact of technological progress on location of cement industry in Northwest China
Summary
It is the common fact that economic activities unevenly distribute across space Both New Economic Geography and Traditional Trade Theory confirm that industrial special pattern is closely related to its own characteristics. Location theories argue that industrial spatial distribution depends on the interaction of industries with different characteristics and locations with various features, and the pattern is a temporal equilibrium under severe spatial competition of economic activities. In the mechanism of spatial competition, the balance of the forces induces concentration of production due to scale economy and forces cause dispersion due to trade cost that shapes distribution of the economic activities. Combes and Lafourcade (2011) [8] made an attempt to a computable spatial equilibrium simulation; they employed real statistics to estimate parameters of theoretical model, used estimated parameters to simulate landscape of economy This method, to a certain degree, overcomes the defects that core-periphery model excessively rely on numerical simulation and improve utility of spatial economic model. Use our estimated parameters to simulate the distribution of economic activities, market fragmentation, and the determinants of firm location (prices, costs, mark-ups, marginal profits, demand and total profits)
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