Spatial Distribution Of Economic Activity Research Articles

Location Decisions of U.S. Polluting Plants: Theory, Empirical Evidence, and Consequences

Economists have long been interested in explaining the spatial distribution of economic activity, focusing on what factors motivate profit-maximizing firms when they choose to open a new plant or expand an existing facility. We begin our paper with a general discussion of the theory of plant location, including the role of taxes and agglomeration economies. However, our paper focuses on the theory, evidence, and implications of the role of environmental regulations in plant location decisions. On its face, environmental regulation would not necessarily be expected to alter location decisions, since we would expect Federal regulation to affect all locations in the United States essentially equally. It turns out, however, that this is not always the case as some geographic areas are subject to greater stringency. Another source of variation is differences across states in the way they implement and enforce compliance with Federal regulation. In light of these spatial differences in the costs of complying with environmental regulations, we discuss three main questions in this survey: Do environmental regulations affect the location decisions of polluting plants? Do states compete for polluting plants through differences in environmental regulation? And, do firms locate polluting plants disproportionately near poor and minority neighborhoods?

The economic impact of future increase in tropical cyclones in Japan

This article estimates the non-first-order economic loss in Japan due to a future increase in tropical cyclones. One possible effect of global warming could be the increase in intensity of tropical cyclones. Using historical storm tracks between the years 1978 and 2007 and altering their intensities due to this potential increase in their intensity, this paper calculates the future potential regional GDP loss in a certain area that is affected by tropical cyclones. Most of the literature is concerned with physical damage and the loss of lives due to tropical cyclones. However, there are additional economic costs when sustained wind speeds are higher than 30 knots (55.56 km/h), a level that generally will lead to a precautionary cessation of many human activities. Using a Monte Carlo simulation, the paper calculates the potential economic costs for the year 2085 under a climate change scenario with a linear one-per cent yearly increase in CO2. Using a spatial distribution of economic activity in Japan, it is possible to forecast which parts of the country are likely to experience the highest loss risk.

Advanced methods and applications in regional science

The spatial distribution of economic activity is a central and general issue in regional economic theory and policy. Accordingly, methods andmodels play (and have played) an important role in understanding economic activity’s spatial distribution. Agglomeration of firms in the same industrial sector gives rise to technological externalities by pointing to localisation economies. Externalities are also found, from knowledge spillovers within industries, and furthermore in agglomerations of firms belonging to different industries as a result from a variety of business services and knowledge spillovers across industries. How to understand and to analyse these economic processes depends upon the accessibility of appropriate quantitative methods. All these germane topics called the attention of researchers that attended to theThird Jean Paelinck Seminar held in Cartagena (Spain) in 2008. In this meeting advanced methods and models with applications in regional science were presented. The papers of this special issue, entitledAdvanced Methods and Applications in Regional Science, have its origin on this biannual international meeting. The special issue therefore focuses on methods and applications with a direct and clear relevance in regional science’s frontier of knowledge. For that reason, the reader can find two types of papers. First type are openly related with advanced methods that help in analysing some interesting regional topics as industry concentration in large

ECONOMIC GEOGRAPHY WITHIN AND BETWEEN EUROPEAN NATIONS: THE ROLE OF MARKET POTENTIAL AND DENSITY ACROSS SPACE AND TIME*

ABSTRACT In explaining the uneven spatial distribution of economic activity, urban economics, and new economic geography (NEG) dominate recent research in economics. A main difference between these two approaches is that NEG stresses the role of spatial linkages whereas urban economics does not do so. We estimate simple versions of these two views on economic geography and also establish if the relevance of spatial linkages varies across aggregation levels or time. For our sample of 14 European countries and 213 corresponding regions, we find that spatial linkages are more important at the country level and that its relevance varies across time.

Spatial economic self-organization with periodic and quasiperiodic dynamics

The formation of regions through spatial self-organization is a key issue in spatial economics. The standard approach to the modelling of space in regional science has been to assume that space can be modelled as a one-dimensional system, often locations arrayed on a circle. This paper studies spatial self-organization in an economic geography model defined on a two-dimensional surface, assuming periodic or quasiperiodic dynamics. A discrete time model with discretized locations is applied, motivating a cellular automata approach. Numerical simulations suggest that the number of regions emerging on a two-dimensional model is different than that on a one-dimensional model, keeping other parameters the same. The spatial distribution of economic activity on a two-dimensional space (torus) appears less stable than one on a circle. A two-dimensional economic model can be extended to capture nonuniformity in the landscape by using a quasiperiodic dynamical system.

Commodity Tax Competition and Industry Location Under the Destination- and the Origin-Principle

We develop a model of commodity tax competition with monopolistically competitive internationally mobile firms, transport costs, and asymmetric country sizes. We investigate the impacts of non-cooperative tax setting, as well as of tax harmonization and changes in the tax principle, in both the short and the long run. The origin principle, when compared to the destination principle, is shown to exacerbate tax competition and to erode tax revenues, yet leads to a more equal spatial distribution of economic activity. This suggests that federations which care about spatial inequality, like the European Union, face a non-trivial choice for their tax principle that goes beyond the standard considerations of tax revenue redistribution.

Commodity tax competition and industry location under the destination and the origin principle

We extend the model by Behrens et al. [Behrens, K., Hamilton, J.H., Ottaviano, G.I.P., Thisse, J.-F., 2007a. Commodity tax harmonization and the location of industry. Journal of International Economics 72, 271–291.] to the case of non-cooperative commodity taxation and investigate the impacts of tax harmonization and changes in tax principle on equilibrium tax rates, industry location, and welfare. Since our setup features internationally mobile firms, trade frictions, and asymmetric country sizes, it offers a convenient framework within which to investigate how differences in market size and deepening international integration affect equilibrium outcomes under competing tax principles. The origin principle, when compared to the destination principle, is shown to exacerbate tax competition and to erode tax revenues, yet gives rise to a more equal spatial distribution of economic activity. This suggests that federations which care about spatial inequality, like the European Union, face a non-trivial choice for their tax principle that goes beyond the standard considerations of tax revenue distribution.

New Theory of International Trade and New Economic Geography <i>(Nobel Prize in Economics 2008)</i>

The paper reviews Paul Krugman’s contributions that earned him Nobel Prize in Economics of 2008 and grounded two fields of economic theory — new theory of international trade and new economic geography. The paper shows how the assumption of internal increasing returns to scale and monopolistic competition borrowed by Krugman from the industrial organization theory changed the conclusions of standard models and enriched our understanding of international trade and spatial distribution of economic activity.

Economic Geography within and between European Nations: The Role of Market Potential and Density across Space and Time

In explaining the uneven spatial distribution of economic activity, urban economics and new economic geography (NEG) dominate recent research in economics. A main difference between these two approaches is that NEG stresses the role of spatial linkages whereas urban economics does not do so. We estimate simple versions of these two views on economic geography and also establish if the relevance of spatial linkages varies across aggregation levels or time. For our sample of 14 European countries and 213 corresponding regions, we find that spatial linkages are more important at the country level and that its relevance varies across time.

East-West Integration and the Economic Geography of Europe

Implementation of the European internal market and East-West integration has been accompanied by a dramatic change in the spatial distribution of economic activity, with higher growth west and east of a longitude degree through Germany and Italy. In the east, income growth has been accompanied by increasing regional disparities within countries. We examine theoretically and empirically whether European integration as such can explain these developments. Using a numerical simulation model with 9 countries and 90 regions, theoretical predictions are derived about how various patterns of integration may affect the income distribution. Comparing with reality, we find that a reduction in distance-related trade costs combined with east-west integration is best able to explain the actual changes in Europe’s economic geography. This suggests that the implementation of the European internal market or the Euro has made Europe smaller. In Central Europe, capital regions grow faster and there are few east-west growth differences inside countries. There is no convincing support for the hypothesis that European integration had adverse effects on nonmembers.

Can Welfare Be Improved by Relocating Firms? The Case of the Constructed Capital Model

In the literature of new economic geography several authors have shown that a benevolent social planner would choose a different spatial distribution of economic activity than the one achieved through market forces. So far little has been done to evaluate the welfare effects of specific redistribution policies. This is the main contribution of the paper. We look at two policy schemes: location permits policy and a tax-subsidy policy in the context of the constructed capital model (due to Baldwin 1999). It is shown that with a tax on final consumption expenditures and a capital subsidy there is more room for welfare improvement than under the location permits policy due to increased variety of goods. Nevertheless, relying on the numerical simulations, no situation is possible where the residents of both regions would gain from the policy. Also compensated Pareto improvements are unachievable.

Why an economic core: domestic transport costs

What determines the spatial distribution of economic activity? And why is economic activity sometimes lumpy, distributed in a core-periphery pattern in some countries? This paper uses new sub regional data on the spatial distribution of economic activity for a large cross section of countries, as well as information on roads, rails and surface topography to help understand the role of domestic transport costs in shaping economic geography. The evidence suggests a significant role for physical geography and transport costs in determining the location of economic activity. Countries with rougher surfaces have less developed road and rail transport networks, and greater spatial concentration of economic activity.

Office Decisions to Change Location

Firm mobility is one of the processes a firm can go through during its time of operation. When aggregated, the mobility decisions of numerous individual firms affect the spatial distribution of economic activity and employment as well as the outputs of the transportation system in urban areas. Models of mobility of office business establishments that use hazard modeling and competing risk formulations are presented. These formulations explicitly account for the effect of the duration of the firm in its current location as well as forecast what type of stress or push factor (e.g., lack of space or excessive cost in its current location) will make the firm relocate. The results indicate that combining general hazard modeling with competing risk models could provide a foundation for modeling mobility decisions of firms as well as for estimating thresholds for the locations to which the firm may choose to move.

The Spatial Distribution of Economic Activities in Italy

Existing indices measuring the spatial distribution of economic activity such as the Krugman Specialisation Index, the Hirschmann-Herfindahl index and the Ellison-Glaeser index typically do not take into account the spatial structure of the data. In this paper, we first consider traditional measures of geographical concentration, and subsequently extend the analysis to take spatial dependence into account. Using data for Italy for the years 1991 and 2001, we apply exploratory spatial data analysis to identify sectoral location patterns in both the manufacturing industry as well as in services. We find that large differences prevail in the geographical concentration of production across sectors. The results of the exploratory spatial data analysis reveal the existence of well- defined clusters of economic activities.

Trade Liberalization and the Spatial Distribution of Economic Activity within a Country

The effects of the liberalization of international trade are analyzed in a New Economic Geography model of a country with an asymmetric distribution of housing between regions. Labour is mobile between regions but not between countries. Trade liberalization tends to reduce inequalities in the distribution of population between the two regions, although population is always more unequally distributed than housing. Results are similar when there is a bias in preferences towards home-produced varieties of manufactures. If consumers care relatively little about housing and transport costs are high enough, an agglomerated equilibrium becomes stable.

Dezentralisierung in den EU-Staaten und r�umliche Verteilung wirtschaftlicher Aktivit�ten

Abstract: This article deals with the impact of fiscal decentralisation on the spatial distribution of economic activities in EU regions as well as with the effectiveness of the European Union's regional policy aiming at economic and social cohesion among its Member States. After a short discussion on concepts and measurement issues of fiscal decentralization two empirical analyses show that the level of sub-national autonomy, considering primarily decisions on local and regional tax income, tends to reduce the degree of regional production specialization in 200 NUTS2 regions while it enhances the effectiveness of the structural funds in 13 EU Member States.

THE DEVELOPMENT OF REGIONAL INTEGRATION IN EAST ASIA: FROM THE VIEWPOINT OF SPATIAL ECONOMICS

This paper examines the recent evolution of regional integration in East Asia, and discusses the prospects and tasks of further integration. After an overview of the globalization and regional integration trend in EU, NAFTA and East Asia during the past half‐century, we introduce the basic framework of spatial economics, often called the new economic geography. In terms of globalization and regional integration, it is important to examine the general effects of decreasing transport costs (broadly defined) on spatial distribution of economic activities. Given this theoretical framework, we examine the changing economic interdependency within East Asia, as well as that between East Asia and the rest of the world over the last three decades. Next, we focus on regional diversity and disparity in East Asia. Finally, we compare the regional integration in EU with that of East Asia, and examine the tasks and prospects of further promotion of East Asian integration.

Spatial employment impacts of fisheries management: A study of the Barents Sea and the Norwegian Sea fisheries

A multiregional Input–Output (I–O) model was developed to investigate the spatial distribution of employment impacts of different fisheries management regimes and policies. The geographic areas used for this study were the fisheries dependent regions in south west Norway and the three northern most counties where the availability of fish resources is of significant importance for settlement. This study focused on the economically most important fish species in the Norwegian Sea and the Barents Sea: cod, herring and capelin. A major problem confronting fishery managers is quota trade-offs among ecologically interdependent fish stocks. This article demonstrates that fishery management decisions regarding the different stocks may have significance for the spatial distribution of economic activities. The spatial implications of managers’ decisions are crucial for fisheries dependent communities, but such effects are often difficult to foresee due to lack of spatial modelling. The modelling approach demonstrated in this paper would mitigate would such problems.

The clustering and spatial distribution of economic activities in eight Canadian cities

In the light of certain claims that economic activity is increasingly locating in a random fashion and of other claims that the co-location of economic activities is important for firms, we investigate the extent to which patterns of co-location can be identified across eight Canadian metropolitan areas. Two questions were raised: firstly, do the same sectors co-locate in all cities? Secondly, are these sectoral clusters similarly distributed over space within each city? We find that common clusters emerge across all cities and that these clusters are located similarly within each city. We identify two basic types of cluster, only one of which can be interpreted as a sign of interdependencies between sectors. The other type of cluster is more readily explained by similar land use patterns, planning regulations and labour requirements of the co-locating sectors.

Concentration, agglomeration and the size of plants

This paper investigates whether the geographic distribution of manufacturing activities depends on the size of plants. Using Italian data, we find, as in Kim [Kim, S., 1995. Expansion of markets and the geographic concentration of economic activities: the trends in U.S. regional manufacturing structure, 1860–1987, Quarterly Journal of Economics 110 (4), 881–908.], Holmes and Stevens [Holmes, T.J., and Stevens, J.J., 2002. Geographic concentration and establishment scale, Review of Economics and Statistics 84, 682–690.], and Holmes and Stevens [Holmes, T.J. and Stevens, J.J., 2004. Spatial distribution of economic activities in North America, in: J.V. Henderson and J.F. Thisse, eds., Handbook of Regional and Urban Economics, Vol.4, (Elsevier-North Holland, Amsterdam).], that large plants are more concentrated than small plants. However, considering distance-based patterns via spatial auto-correlation, we find that small establishments actually exhibit a greater tendency to be located in adjacent areas. These apparently contradictory findings raise a measurement issue regarding co-location externalities and suggest that large plants are more likely to cluster within narrow geographical units (concentration), while small establishments would rather co-locate within wider distance-based clusters (agglomeration). This picture is consistent with different size plants engaging in different transport-intensive activities.