nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒10‒14
fifteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Cross-Border Regional Innovation Systems By Michaela Trippl
  2. DO BUSINESS DENSITY AND VARIETY DETERMINE RETAIL PERFORMANCE? By Mercedes Esteban-Bravo; Jose M. Mugica; Jose M. Vidal-Sanz
  3. International convergence and local divergence By Cristobal, Adolfo
  4. Is Venture Capital a regional business? – The role of syndication By Michael Fritsch; Dirk Schilder
  5. Determinants of Income Growth in U.S. Metropolitan and Non-metropolitan Labor Markets." By George W. Hammond; Eric Thompson
  6. Dynamic Spatial Competition Between Multi-Store Firms By Victor Aguirregabiria; Gustavo Vicentini
  7. Why Has House Price Dispersion Gone Up? By Stijn Van Nieuwerburgh; Pierre-Olivier Weill
  8. Macro-determinants of UK regional unemployment and the role of employment flexibility By Monastiriotis, Vassilis
  9. Regional business cycle phases in Japan By Howard J. Wall
  10. The effects of new firm formation on regional development over time: The case of Great Britain By Pamela Mueller; André van Stel; David J. Storey
  11. The interaction between tolls and capacity investment in serial and parallel transport networks By De Borger Bruno; Dunkerley Fay; Proost Stef
  12. Why some clusters succeed whereas others decline ? Modelling the ambivalent stability properties of clusters By Raphaël Suire(CREM - CNRS); Jérome Vicente (LEREPS - GRES); Yan Dala Pria (CSO - IEP - CNRS)
  13. Urban Distribution: The Impacts of Different Governmental Time-Window Schemes By Quak, H.J.; Koster, M.B.M. de
  14. The Effect of Spillovers on the Provision of Local Public Goods By Bloch, Francis; Zenginobuz, Unal
  15. The impact of bank and non-bank financial institutions on local economic growth in China By Cheng,Xiaoqiang; Degryse,Hans

  1. By: Michaela Trippl
    Date: 2006
  2. By: Mercedes Esteban-Bravo; Jose M. Mugica; Jose M. Vidal-Sanz
    Abstract: Outlet location plays a crucial role in retail strategy. In this paper we study the relationship between spatial density (concentration) of retailers in the trade area and their economic performance. This analysis will help managers figure out the economic potential of starting a retail business in a given area, reducing business start-up risks. We find that retail businesses located in high and low retail density zones enjoy higher performance levels, consistent with competitive advantage arising from agglomeration economies and local market power respectively. We also find that retail businesses located in intermediate density areas use a differentiation strategy based on business variety (diversification across stores). Outlets located in areas with the highest variety enjoy performance levels similar to those achieved in the agglomeration and low density areas. The results suggest that retail companies should jointly consider variety and density to determine location.
    Date: 2006–10
  3. By: Cristobal, Adolfo
    Abstract: This work presents a north-south endogenous-growth model that reproduces some recent EU stylized facts: convergence between countries, divergence between the same countries, more spatial concentration of economic activity and higher growth rates. We claim that the ongoing technological reduction of transaction costs can conceivably spur those phenomena, specially if a regional productive duality within the less-developed countries were reinforced by a biased incidence of that fall in transaction costs. A key element is Grossman and Helpman's complementarity between innovation and imitation. The channels that allow for higher growth-rates are migrations and scale-effects in the industrialized regions of the poorest countries.
    JEL: R11 F43
    Date: 2005
  4. By: Michael Fritsch; Dirk Schilder
    Abstract: We investigate whether the supply of Venture Capital (VC) in Germany is driven by spatial influences. The study is based on information from more than 300 VC investments made in Germany between 2004 and 2005. We find evidence that the geographical distance between a VC company and the portfolio firm is not an important factor for German VC investments. Syndication of investments helps to overcome the problem of distance to portfolio firms if one of the investors is located close to the investment. Altogether, we find no evidence for a severe regional equity gap for young and innovative companies in Germany.
    Keywords: Venture Capital, regional equity gap, start-up financing
    JEL: G24 O16 D21 M13 R12
    Date: 2006–10
  5. By: George W. Hammond (Bureau of Business and Economic Research, West Virginia University); Eric Thompson (Department of Economics and Bureau of Business Research, University of Nebraska)
    Abstract: This research analyzes determinants of growth across U.S. labor market regions, using a production function approach based on four inputs: labor, manufacturing investment, human capital investment, and public capital investment. We find significant differences in the relative influence of growth determinants between metropolitan and non-metropolitan regions during the 1969-1999 period. We find little role for public capital investment in either metropolitan or non-metropolitan regions, but that manufacturing investment tended to spur growth in non-metropolitan regions, in contrast to results for metropolitan regions. We find that human capital matters for both metropolitan and non-metropolitan regions, but that increased human capital investment in metropolitan regions may have a larger impact on growth than in non-metropolitan regions. Further, the presence of more colleges and universities, more household amenities, and lower tax rates were all found to encourage human capital accumulation in U.S. labor market areas.
    Date: 2006
  6. By: Victor Aguirregabiria; Gustavo Vicentini
    Abstract: We propose a dynamic model of an oligopoly industry characterized by spatial competition between multi-store firms. Firms compete in prices and decide where to open or close stores depending on demand conditions and the number of competitors at different locations, and on location-specific private-information shocks. We provide an algorithm to compute Markov Perfect Equilibria (MPE) in our model. We conduct several numerical experiments to study how the propensity of multi-store retailers to spatial preemptive behavior depends on the magnitude of entry costs, exit value and transportation costs.
    Keywords: Spatial competition; Market dynamics; Sunk costs; Spatial preemptive behavior.
    JEL: C73 L13 L81 R10 R30
    Date: 2006–08–29
  7. By: Stijn Van Nieuwerburgh; Pierre-Olivier Weill
    Abstract: We investigate the 30 year increase in the level and dispersion of house prices across U.S. metropolitan areas in a calibrated dynamic general equilibrium island model. The model is based on two main assumptions: households flow in and out metropolitan areas in response to local wage shocks, and the housing supply cannot adjust instantly because of regulatory constraints. Feeding in our model the 30 year increase in cross-sectional wage dispersion that we document based on metropolitan-level data, we generate the observed increase in house price level and dispersion. In equilibrium, workers flow towards exceptionally productive metropolitan areas and drive house prices up. The calibration also reveals that, while a baseline level of regulation is important, a tightening of regulation by itself cannot account for the increase in house price level and dispersion: in equilibrium, workers flow out of tightly regulated towards less regulated metropolitan areas, undoing most of the price impact of additional local supply regulations. Finally, the calibration with increasing wage dispersion suggests that the welfare effects of housing supply regulation are large.
    JEL: E24 R12 R13
    Date: 2006–09
  8. By: Monastiriotis, Vassilis
    Abstract: This paper explores the macroeconomic determinants of UK regional unemployment and their relation to the influences on unemployment exerted by the levels and types of employment flexibility in the country. Theoretically the paper draws on Keynesian and monetarist explanations of unemployment and elaborates on how the two main theoretical approaches perceive the role of price stability, accumulation, macroeconomic shocks and labour market rigidities for unemployment. Empirically, the analysis relies on a novel set of flexibility indicators and examines their impact on regional unemployment, unemployment persistence, and adjustment to economic shocks. The results provide useful insights into the explored relationships and highlight the areas and conditions under which employment flexibility helps achieve favourable employment outcomes. The implications of the findings are discussed in the concluding section.
    Keywords: Employment flexibility; regional unemployment; persistence; NAIRU and Keynesian explanations of unemployment
    JEL: R38 J64 R11 E24 E12
    Date: 2006–03
  9. By: Howard J. Wall
    Abstract: This paper uses a Markov-switching model with structural breaks to characterize and compare regional business cycles in Japan for 1976-2005. An early 1990s structural break meant a reduction in national and regional growth rates in expansion and recession, usually resulting in an increase in the spread between the two phases. Although recessions tended to be experienced across a majority of regions throughout the sample period, the occurrence and lengths of recessions at the regional level have increased over time.
    Keywords: Business cycles ; Economic conditions - Japan
    Date: 2006
  10. By: Pamela Mueller; André van Stel; David J. Storey
    Abstract: This paper re-examines the link between new firm formation and subsequent employment growth. It investigates whether it is possible to have the wrong type of entrepreneurship - defined as new firm formation which leads to zero or even negative subsequent employment growth. It uses a very similar approach to that of Fritsch and Mueller (2004), confirming their findings that the employment impact of new firm formation is in three discrete phases. Then, using data for Great Britain, the paper shows the employment impact of new firm formation is significantly positive in England, but zero in Scotland where formation rates are much lower. It also shows that, in the low enterprise counties of GB, new firm formation has a negative effect on employment, implying that we find that the "wrong type of entrepreneurship" is possible.
    Keywords: New firm formation, employment growth, Great Britain, low entrepreneurial regions
    JEL: J23 L10 M13 R11
    Date: 2006–10
  11. By: De Borger Bruno (University of Antwerp); Dunkerley Fay (K.U.Leuven-Center for Economic Studies); Proost Stef (K.U.Leuven-Center for Economic Studies; UCL - CORE)
    Abstract: The purpose of this paper is to compare the interaction between pricing and capacity decisions on simple serial and parallel transport networks. When individual links of the network are operated by different regional or national authorities, toll and capacity competition is likely to result. Moreover, the problem is potentially complicated by the presence of both local and transit demand on each link of the network. We bring together and extend the recent literature on the topic and, using both theory and numerical simulation techniques, provide a careful comparison of toll and capacity interaction on serial and parallel network structures. First, we show that there is more tax exporting in serial transport corridors than on competing parallel road networks. Second, the inability to toll transit has quite dramatic negative welfare effects on parallel networks. On the contrary, in serial transport corridors it may actually be undesirable to allow the tolling of transit at all. Third, if the links are exclusively used by transit transport, toll and capacity decisions are independent in serial networks. This does not generally hold in the presence of local transport. Moreover, it contrasts with a parallel setting where regional authorities compete for transit; in that case, regional investment in capacity leads to lower Nash equilibrium tolls.
    Keywords: congestion pricing, transport investment, transit traffic
    JEL: H23 H71 R41 R48
    Date: 2006–07
  12. By: Raphaël Suire(CREM - CNRS); Jérome Vicente (LEREPS - GRES); Yan Dala Pria (CSO - IEP - CNRS)
    Abstract: The aim of this paper is to study the ambivalent properties of stabilities of clusters. We propose to enter the black box of the local knowledge externalities by focusing on the location decision externalities. In particular, we show that the nature of mimetic strategies in the convergence process of locational choices influence the dynamic stability of clusters. Thus, when uncertainty and search for legitimacy prevail on the need for coordination and the associated necessities of compatibility and technological convergence, the clusters are unstable, due to an excess of cognitive proximity and a risk of unintended spillovers. Nevertheless, this search for legitimacy, through the strategy which consists in following the locational choice of companies leader of a sector, can lead to the fast emergence of a cluster. But without relational proximity, its stability is not insured. These results are obtained following the formulation of some theoretical proposals on the links between location decision externalities and the resulting forms of socioeconomic proximities. This set of proposals is validated firstly by a model of simulation which makes it possible to test the properties of stability of aggregate outcomes of locational choices. Secondly, they are illustrated by a comparative empirical analysis of two main French clusters (Silicon Sentier and Sophia-Antipolis)..
    Keywords: clusters, proximities, stability, location under decision externalities, Silicon Sentier, Sophia-Antipolis
    JEL: C63 D85 R3
    Date: 2006
  13. By: Quak, H.J.; Koster, M.B.M. de (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Local authorities increasingly use time-access regulations to improve social sustainability issues, such as the attractiveness of a city centre, the shopping climate, or to reduce the nuisance caused by urban freight transport. However, these time-windows increase delivery costs and the environmental burden. This paper evaluates five different time-window schemes on their social, environmental, and economic impacts. The first scheme examines the current time-window policy scheme. In the second scheme time-windows are harmonized between different cities. The third scheme moves all deliveries to the night. The fourth and fifth schemes evaluate the consequences of the proposal by the Dutch committee for urban distribution (committee Sakkers). The fourth scheme includes noise-legislation for delivering during the night, the fifth does not. This research includes interviews with several Dutch policy-making officials and is further based on a multiple-case study of fourteen large retail chains in different sectors and with different formulas. The results show that the current time-window scheme performs worst. The best time-window scheme would be a combination of the proposal of the committee Sakkers and the harmonization scenario.
    Keywords: Urban Goods Movement;Time-Window Regulation;Retail Logistics;Sustainability;City Logistics;
    Date: 2006–10–09
  14. By: Bloch, Francis; Zenginobuz, Unal
    Abstract: This paper analyzes the provision of local public goods with positive spillovers across jurisdictions. If spillovers are symmetric, the noncooperative game played by jurisdictions admits a unique equilibrium, and an increase in spillovers reduces the total provision of public goods. Smaller jurisdictions always reduce their contribution, but larger jurisdictions can increase their contribution. When spillovers are asymmetric, equilibrium is unique if spillovers are low, while multiple equilibria exist for high spillover values. In the case of two jurisdictions, an increase in the flow of spillovers to one jurisdiction benefits agents from that jurisdiction but harms agents in the other jurisdiction. Beyond the case of two jurisdictions, the effect of changes in spillovers cannot be signed. An increase in the spillovers flowing to a jurisdiction can actually result in an increase in the supply of public goods by that jurisdiction and harm agents residing in it, while benefiting agents in the other jurisdictions. The results of the paper reveal the complexity of interactions that will plague the design of institutions for multijurisdictional local public good economies with spillovers.
    Keywords: local public goods; positive spillovers; equilibrium
    JEL: H41 H77 H73
    Date: 2004–12–15
  15. By: Cheng,Xiaoqiang; Degryse,Hans (Tilburg University, Center for Economic Research)
    Abstract: This paper provides evidence on the relationship between finance and growth in a fast growing country, such as China. Employing data of 27 Chinese provinces over the period 1995-2003, we study whether the financial development of two different types of institutions - banks and non-bank financial institutions - have a (significantly different) impact on local economic growth. Our findings indicate that only banking development shows a statistically significant and economically relevant impact on local economic growth.
    Keywords: growth;financial development;Chinese provinces;banks
    JEL: E44 G21
    Date: 2006

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