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Economy vs. history

  • The aim of this study is to examine in which cases economic forces or historical singularities prevail in the determination of the long-run distribution of firms. We develop a relatively general model of heterogenous firms' location choice in discrete space. The main force towards an agglomerated structure is the reduction of transaction costs for consumers if firms are located closely, whilst competition and transport costs work towards a more disperse structure. We then assess the importance of the initial conditions by simulating and comparing the resulting distribution of firms for identical economic parameters but varying initial settings. If the equilibrium distributions of firms are similar we conclude that economic forces have prevailed, while differences in the resulting distributions indicate that 'history' is more important. The (dis)similarity of distributions of firms is calculated by means of a measure, which exhibits a number of desirable features.

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Author:Helge SannerGND
Subtitle (English):What does actually determine the distribution of firms' locations in cities?
Series (Serial Number):Volkswirtschaftliche Diskussionsbeiträge (67)
Document Type:Working Paper
Year of Completion:2004
Publishing Institution:Universität Potsdam
Release Date:2007/06/14
RVK - Regensburg Classification:QD 100
Organizational units:Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Notes extern:Sanner, Helge: Economy vs. history : what does actually determine the distribution of firms' locations in cities? / Helge Sanner. - Potsdam : Univ., 2004. - 27 Bl. : graph. Darst.
(Volkswirtschaftliche Diskussionsbeiträge : Diskussionsbeitrag ; 67)