An agent-based retail location model on a supply chain network
Clusters of business locations, which considerably impact daily activities, have been prominent phenomena. Yet the question of how and why Þrms cluster in certain areas has not been sufficiently studied. This paper investigates the emergence of clusters of business locations on a supply chain network comprised of suppliers, retailers, and, consumers. Krugman (1996) argued that urban concentration involved a tension between the centripetal and the centrifugal forces. Based on that notion, this research proposes an agent-based model of retailers' location choice in a market of homogeneous products. In this game, retailers endeavor to maximize their proÞts by changing locations. Retailers' distribution patterns are measured by entropy and cluster density. Simulation results reveal that as more retailers engage in the game, clusters autonomously emerge and the entropy of clusters increases. Once retailers exceed a certain number, average density of clusters begins to decline; all discrete clusters gradually merge to a large cluster, spreading out uniformly. This research thus Þnds that the centripetal force attracts retailers to supplier locations; with even more retailers entering the market, the centrifugal force disperses them. The sensitivity results on model parameters and consumers' demand elasticity are also discussed.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: Dept. of Civil Engineering, 500 Pillsbury Drive SE, Minneapolis, MN 55455|
Phone: +01 (612) 625-6354
Fax: +01 (612) 626-7750
Web page: http://nexus.umn.edu
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Head, Keith & Ries, John & Swenson, Deborah, 1995.
"Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States,"
Journal of International Economics,
Elsevier, vol. 38(3-4), pages 223-247, May.
- Keith Head & John Ries & Deborah Swenson, 1994. "Agglomeration Benefits and Location Choice: Evidence from Japanese Manufacturing Investment in the United States," NBER Working Papers 4767, National Bureau of Economic Research, Inc.
- Nagurney, Anna & Dong, June & Zhang, Ding, 2002. "A supply chain network equilibrium model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(5), pages 281-303, September.
- Feldman, Maryann & Schreuder, Yda, 1996. "Initial Advantage: The Origins of the Geographic Concentration of the Pharmaceutical Industry in the Mid-Atlantic Region," Industrial and Corporate Change, Oxford University Press, vol. 5(3), pages 839-62.
- Nooteboom, B. & Gilsing, V.A., 2004.
"Density and strength of ties in innovation networks: a competence and governance view,"
04.01, Eindhoven Center for Innovation Studies.
- Nooteboom, B. & Gilsing, V.A., 2004. "Density And Strength Of Ties In Innovation Networks: A Competence And Governance View," ERIM Report Series Research in Management ERS-2004-005-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
- Nooteboom, B. & Gilsing, V.A., 2005. "Density and Strength of Ties in Innovation Networks : A Competence and Governance View," Discussion Paper 2005-40, Tilburg University, Center for Economic Research.
- Jan Ritsema van Eck & Eric Koomen, 2008. "Characterising urban concentration and land-use diversity in simulations of future land use," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(1), pages 123-140, March.
- Maskell, Peter & Malmberg, Anders, 1999. "Localised Learning and Industrial Competitiveness," Cambridge Journal of Economics, Oxford University Press, vol. 23(2), pages 167-85, March.
- Jungyul Sohn, 2004. "Do birds of a feather flock together?: Economic linkage and geographic proximity," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 38(1), pages 47-73, 03.
- Anders Malmberg & Dominic Power, 2005. "(How) Do (Firms in) Clusters Create Knowledge?," Industry and Innovation, Taylor & Francis Journals, vol. 12(4), pages 409-431.
- Eric A. Nerlinger & Franz-Josef Bade, 2000. "The spatial distribution of new technology-based firms: Empirical results for West-Germany," Papers in Regional Science, Springer;Regional Science Association International, vol. 79(2), pages 155-176.
- Kaihara, Toshiya, 2003. "Multi-agent based supply chain modelling with dynamic environment," International Journal of Production Economics, Elsevier, vol. 85(2), pages 263-269, August.
- David Levinson & Ajay Kumar, 1995. "A Multi-modal Trip Distribution Model," Working Papers 199503, University of Minnesota: Nexus Research Group.
- Bergsman, Joel & Greenston, Peter & Healy, Robert, 1975. "A classification of economic activities based on location patterns," Journal of Urban Economics, Elsevier, vol. 2(1), pages 1-28, January.
- Head, C. Keith & Ries, John C. & Swenson, Deborah L., 1999. "Attracting foreign manufacturing: Investment promotion and agglomeration," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 197-218, March.
- Peter Maskell & Leïla Kebir, 2005. "What qualifies as a cluster theory?," DRUID Working Papers 05-09, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
- Ron Johnston & David Voas & Michael Poulsen, 2003. "Measuring spatial concentration: the use of threshold profiles," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 30(1), pages 3-14, January.
- Steven Klepper, 2002. "The capabilities of new firms and the evolution of the US automobile industry," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 645-666, August.
When requesting a correction, please mention this item's handle: RePEc:nex:wpaper:cluster. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Levinson)
If references are entirely missing, you can add them using this form.