Where do firms relocate? Location optimisation within and between Polish metropolitan areas

Since the middle of the nineteenth century, the regional economics literature has paid special attention to the locational patterns of firms. However, the scientific debate on the location and relocation decisions of firms is still open. The paper aims at evaluating whether relocation factors established in the literature on metropolitan areas in the USA and Western European countries play a critical role in post-socialist countries as well. We empirically investigate the destination choice of relocating firms at local level, by looking at the case of Polish metropolitan areas. A nested logit model is applied, with sampling of alternatives. Results underline the role of distance in choosing the destination: even in Poland, a country with a wide surface, relocation of firms occurred within small distances. Moreover, our results demonstrate the relevance of urbanisation economies in the locational preferences of firms, confirming the relevant role of metropolitan areas as catalyst for people and investments. Finally, we observe that firms do not necessarily adopt a pure costs minimisation strategy in the relocation decision, but they choose municipalities where they can take advantage of availability of high-skilled workers and amenities.