Market Potential and the Location of Japanese Firms in the European Union
AbstractThis paper develops a theoretical model of location choice under imperfect competition to formalize the notion that firms prefer to locate “where the markets are.” The profitability of a location depends on a term that weights demand in all locations by accessibility. Using a sample of Japanese firms’ choices of regions within European countries, we compare the theoretically derived measure of market potential with the standard form used by geographers. Our results show that market potential matters for location choice but cannot account entirely for the tendency of firms in the same industry to agglomerate.
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Bibliographic InfoPaper provided by Sciences Po in its series Sciences Po publications with number info:hdl:2441/10192.
Date of creation: Nov 2004
Date of revision:
Publication status: Published in The Review of Economics and Statistics, 2004, vol. 86, pp.959-972
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