Understanding Economic Geography and Location Over Time
Chapter 10: History and competition among expectations
The greatest research and policy difficulty and challenge is that the evolutionary course is rather unpredictable _ at the start. However, this ‘primary chaos’ regarding the location of firms is settled through evolutionary mechanisms that ‘normalise’ location-related behaviour of firms into a configuration of (initial) spatial concentration. Without chaos (multiple equilibria) there may perhaps be no progress; without order, there may perhaps be no survival. The location of economic activity in space may be determined by history or expectations. Endowments of natural resources may be one of the determinants of the local economic activity. However, different investors may have various expectations on the success of their new business and technologies. Those with expectations that turn to be correct in the market determine the spatial location of their business.
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