nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒04‒01
ten papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Human Capital, R&D and Regional Export Performance By Gråsjö, Urban
  2. On the specification of regression models with spatial dependence - an application of the accessibility concept By Andersson, Martin; Gråsjö, Urban
  3. Regional Interaction & Economic Diversity - exploring the role of geographically overlapping markets for a municipality’s diversity in retail and durables By Andersson, Martin; Klaesson, Johan
  4. Regional Convergence in Portugal: Policy Impacts (1990-2001) By Miguel Lebre de Freitas; Francisco Torres; Celeste Amorim; Annette Bongardt; Ricardo Silva; Marta Dias
  5. A Process Model of Locational Change in Entrepreneurial Firms: An Evolutionary Perspective By Erik Stam
  6. Airport Substitution by Travelers: Why do we have to drive to fly? By Gary M. Fournier; Monica E. Hartmann; Thomas Zuehlke
  7. Migration and Hedonic Valuation: The Case of Air Quality By Patrick Bayer; Nathaniel Keohane; Christopher Timmins
  8. Symmetries of Imperfect Competition on a Circle By Hennessy, David A.; Lapan, Harvey E.
  9. Regional Specialization and Universities: The New Verus the Old By Braunerhjelm, Pontus
  10. The Regionalization of Swedish Knowledge Society: Some preliminary consequences By Kaiserfeld, Thomas

  1. By: Gråsjö, Urban (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: The main purpose of the study in this paper is to establish to what extent accessibility to R&D and human capital can explain regional export. This is done by estimating knowledge production functions, with export value and high valued exports in Swedish municipalities from 1997 to 1999 as outputs. In order to account for geographical proximity, the explanatory variables are expressed as accessibilities to R&D and human capital. The total accessibility is divided into three geographical levels; local (within the municipality), intra-regional and inter-regional accessibility to R&D and human capital. R&D conducted at universities and in companies is measured in man years and the numbers of people with at least three years of university studies measures the amount of human capital. The estimations are conducted with quantile regressions since the distributions of the dependent variables are highly skewed with a few very influential outliers. Due to problems with multicollinearity it is not easy to tell if the variations in the municipalities’ exports are explained by human capital or company R&D. But the results in the paper indicate that accessibility to human capital has the greatest positive effects. The value of exported products is mainly affected by local accessibility to human capital (and company R&D). The intra- and inter-regional accessibilities play a more important roll when the number of high valued export products in Swedish municipalities is the output.
    Keywords: knowledge production; R&D; human capital; exports; quantile regression
    JEL: O18 R11
    Date: 2006–03–28
  2. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Gråsjö, Urban (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Using the taxonomy by Anselin (2003), this paper investigates how the inclusion of spatially discounted variables on the ‘right-hand-side’ (RHS) in empirical spatial models affects the extent of spatial autocorrelation. The basic proposition is that the inclusion of inputs external to the spatial observation in question as a separate variable reveals spatial dependence via the parameter estimate. One of the advantages of this method is that it allows for a direct interpretation. The paper also tests to what extent significance of the estimated parameters of the spatially discounted explanatory variables can be interpreted as evidence of spatial dependence. Additionally, the paper advocates the use of the accessibility concept for spatial weights. Accessibility is related to spatial interaction theory and can be motivated theoretically by adhering to the preference structure in random choice theory. Monte Carlo Simulations show that the coefficient estimates of the accessibility variables are significantly different from zero in the case of modelled effects. The rejection frequency of the three typical tests (Moran’s I, LM-lag and LM-err) is significantly reduced when these additional variables are included in the model. When the coefficient estimates of the accessibility variables are statistically significant, it suggests that problems of spatial autocorrelation are significantly reduced. Significance of the accessibility variables can be interpreted as spatial dependence
    Keywords: accessibility; spatial dependence; spatial econometrics; Monte Carlo Simulations; spatial spillovers
    JEL: C31 C51 R15
    Date: 2006–03–28
  3. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Klaesson, Johan (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper is devoted to the study of municipal diversity in retail and durables. Specifically, it analyzes how a region’s relative market-accessibility in a system (or hierarchy) of municipalities affects the extent of diversity. In the theoretical part of the paper a simple modelmunicipal diversity in retail and durables is introduced, which incorporates the municipality’s position in a system of municipalities. Using this model as a point of reference, the paper explores the relationship between market-size and diversity in Swedish regions from 1993 to 2001 by means of a panel data approach. Three types of market-sizes are considered: (i) intramunicipal,(ii) intra-regional and (iii) extra-regional. It is shown that the relationships between diversity and the three types of market-sizes differ between different types of municipalities in the hierarchy, implying that such a classification is warranted. One particular finding that corresponds to the agglomeration shadow-effects usually discussed in NEG-theories is that large municipalities gain from proximity to surrounding municipalities while small municipalities do not.
    Keywords: diversity; accessibility; retail; durables; market potential; market size; hierarch systems; management; technological change; trade unions.
    JEL: L10 O10
    Date: 2006–03–28
  4. By: Miguel Lebre de Freitas (Universidade de Aveiro); Francisco Torres (Universidade de Aveiro); Celeste Amorim; Annette Bongardt (Universidade de Aveiro); Ricardo Silva (Universidade de Aveiro); Marta Dias
    Abstract: In this study we look at whether the seven Portuguese NUTS II regions have been able to share equally in the country’s overall growth or whether there have been asymmetries and divergences in their growth patterns. We assess the regional impact of a wide range of Portuguese domestic policies on cohesion. We focus mainly on regional economic cohesion, although social cohesion effects are also considered. As in the case of Portugal structural operations within the community framework programmes and national efforts were highly intertwined, we also contrast the impact of Community policies in two regions.
    Keywords: Portugal, European Union, Regional Convergence, Cohesion, National Policies, Structural Funds, Institutions.
    JEL: O18 O22 O23 O38 O52
    Date: 2005–12
  5. By: Erik Stam
    Abstract: How do changes in the spatial organization of entrepreneurial firms come about? This paper provides a conceptualisation of the process of locational change. A process model of locational change is constructed on the basis of an empirical study of 109 locational events during the life course of 25 young firms in knowledge intensive sectors (knowledge services and biomedicals). This process model of locational change maps both internal and external variation and selection processes. This model contributes to the development of a causal process theory of the spatial development of (new) firms.
    Keywords: location, entrepreneurial firms, evolutionary theory, decision-making, process models
    Date: 2006–03
  6. By: Gary M. Fournier (Florida State University); Monica E. Hartmann (University of St. Thomas); Thomas Zuehlke (Florida State Unversity)
    Abstract: This paper explores aspects of the determination of airline faresin selected medium-sized U.S. markets subject to competition fromalternative airport hubs within driving distance. Passengers inthese markets often face substantial discounts at distantairports, in exchange for the time costs of driving there. Spatiallinkages in airport competition are not well studied. A panel of16 quarters is constructed in order to investigate models ofspatial error correlation and spatial autoregression in overallfare levels in adjacent airports. We find that fare differentialsbetween local and nearby alternative airports can lead to lowerload factors and other indicators of poor performance in smallerlocal airports. Fare differentials at nearby hub airports oftenprovide substantial incentives to travelers and are an importantdeterminant of poor performance at medium-sized airports.
    Keywords: airline economics, airport substitution, spatial competition
    JEL: L93
    Date: 2005–09
  7. By: Patrick Bayer; Nathaniel Keohane; Christopher Timmins
    Abstract: Conventional hedonic techniques for estimating the value of local amenities rely on the assumption that households move freely among locations. We show that when moving is costly, the variation in housing prices and wages across locations may no longer reflect the value of differences in local amenities. We develop an alternative discrete-choice approach that models the household location decision directly, and we apply it to the case of air quality in U.S. metro areas in 1990 and 2000. Because air pollution is likely to be correlated with unobservable local characteristics such as economic activity, we instrument for air quality using the contribution of distant sources to local pollution – excluding emissions from local sources, which are most likely to be correlated with local conditions. Our model yields an estimated elasticity of willingness to pay with respect to air quality of 0.34 to 0.42. These estimates imply that the median household would pay $149 to $185 (in constant 1982-1984 dollars) for a one-unit reduction in average ambient concentrations of particulate matter. These estimates are three times greater than the marginal willingness to pay estimated by a conventional hedonic model using the same data. Our results are robust to a range of covariates, instrumenting strategies, and functional form assumptions. The findings also confirm the importance of instrumenting for local air pollution.
    JEL: H5 Q2 Q5 R1
    Date: 2006–03
  8. By: Hennessy, David A.; Lapan, Harvey E.
    Abstract: Taking location as given, we study imperfect competition on a circular city. In Bertrand oligopoly, we identify price harmonics as a function of firm unit costs and locations. The sum of oligopoly profits is larger when costs and/or locations are more dispersed in the ‘dihedral majorization’ sense. This also tends to be the case in which prices are more variable. We study how phase shifts between cost parameters and inter-firm distance parameters change production and oligopoly profits. An exact characterization of production patterns is developed in terms of the eigenvalues for what we call the price harmonics matrix. The same techniques are applied to Cournot oligopoly with spatial externalities on Circular City. Solutions are compared with monopoly and with first-best. Production patterns can differ markedly when cost spillovers are negative.
    Keywords: cyclic and dihedral symmetries, harmonic analysis, price and quantity instruments,
    JEL: C6 E2 M2
    Date: 2006–03–23
  9. By: Braunerhjelm, Pontus (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper analyzes the impact universities have on regional development and as to whether a difference can be detected between the influence of the old and new universities. To achieve this end a unique dataset on the researchers’ view regarding the universities role in commer-cialization, distinguishing between new universities (established around 1970) and old univer-sities (established in the 15th and 17th century), is initially utilized. In the subsequent stage spatially disaggregated data is implemented in a two-step Heckman regression analysis to ex-amine whether a relationship exists between the universities research specialization and re-gional production specialization 1975 to 1999. The results reveal that there are considerable differences across universities, albeit primarily unrelated to the age of the universities. Fi-nally, the impact of universities on regional productivity in knowledge-based industries is ex-amined.
    Keywords: Universities; norms; regional development; policies.
    JEL: J24 O31 O57
    Date: 2006–03–28
  10. By: Kaiserfeld, Thomas (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper reviews existing empirical findings for regionalization of the Swedish university system and its impact of regional and national innovation systems. The conclusion is that regionalization of the Swedish system for higher education and research has been driven by multitude of factors and interests, both external and internal to the system itself. The result is a system that seems to raise regional production due to direct and indirect causes, i.e. through the work and consumption of employees and students of universities, more than raising regional productivity through the exploitation of knowledge. In the wake of the developments, more recent universities and university colleges have developed two strategies for legitimisation, one traditional relying on the international academic system of peer-review (normal science) and one alternative relying on regional innovation systems (post-normal science). Conseqences of these stratggies for legimitation are discussed.
    Keywords: Higher education policy; regional policy; knowledge policy; regional innovation systems
    JEL: B00 I00
    Date: 2006–03–28

This nep-geo issue is ©2006 by Vassilis Monastiriotis. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.