New Horizons in Regional Science series
Edited by Charlie Karlsson, Börje Johansson and Roger R. Stough
Börje Johansson and Thomas Paulsson INTRODUCTION 11.1 Location of Firms and Establishments in New Industries The study of how economic activities are located has a long tradition, and in retrospect one can conclude that the development path of ideas is indeed dwindling. A milestone along this path is the theory of resourcebased comparative advantages that springs from Ricardo’s suggestion that the available technology differs between regions (countries). This idea was transformed by Ohlin (1933) into a theory of how resource abundance in a region provides the region with comparative advantages that affect location. The resource abundance argument has been further exploited in models that focus on localized knowledge as a production factor (for example Andersson and Mantsinen, 1980; Romer, 1990). In the current presentation regional knowledge resources are present only implicitly, embedded in two types of agglomeration externalities. In Weber (1909) the perspective is shifted completely to consider the interaction costs between supplier and customer as the factor influencing where firms locate. In this context an individual firm may consider how its location affects the costs of inputs to its production (supply) activity, and it may also consider how its delivery price is influenced by the accessibility to customers buying its output. Thus, in a Weber type of model we may consider how increasing distance to input suppliers raises input costs, and how increasing distance to customers reduces net returns from sales. From these two phenomena one can derive two location externalities. In the von Thünen (1826) class...
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