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A Simple Theory of Industry Location and Residence Choice

Author

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  • Borck, Rainald

    (University of Potsdam)

  • Pflüger, Michael P.

    (University of Würzburg)

  • Wrede, Matthias

    (Friedrich-Alexander-Universität Erlangen-Nürnberg)

Abstract

This paper provides a simple theory of geographical mobility which simultaneously explains people’s choice of residences in space and the location of industry. Residences are chosen on the basis of the utility which mobile households obtain across locations. The spatial pattern of industry is determined by the location decision of a scarce essential factor of production which seeks to obtain the highest possible economic return. Our theory comprehends applications to commuting and physical capital mobility. Referring to the decline in mobility costs, we are able to explain that long-distance commuting and foreign direct investment have increased and that industrial activity has become more concentrated both within as well as across countries.

Suggested Citation

  • Borck, Rainald & Pflüger, Michael P. & Wrede, Matthias, 2007. "A Simple Theory of Industry Location and Residence Choice," IZA Discussion Papers 2862, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2862
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    Cited by:

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    2. Alexander Ebertz, 2009. "The Determinants of Joint Residential and Job Location Choices: A Mixed Logit Approach," ifo Working Paper Series 82, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Jean-Charles Bricongne & Alessandro Turrini & Peter Pontuch, 2019. "Assessing House Prices: Insights from "Houselev", a Dataset of Price Level Estimates," European Economy - Discussion Papers 101, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    4. Xu, Hengzhou & Jiao, Man, 2021. "City size, industrial structure and urbanization quality—A case study of the Yangtze River Delta urban agglomeration in China," Land Use Policy, Elsevier, vol. 111(C).
    5. Sandow, Erika & Westin, Kerstin, 2010. "The persevering commuter - Duration of long-distance commuting," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(6), pages 433-445, July.
    6. Krebs, Oliver & Pflüger, Michael, 2023. "On the road (again): Commuting and local employment elasticities in Germany," Regional Science and Urban Economics, Elsevier, vol. 99(C).
    7. Donald R. Davis & Jonathan I. Dingel, 2019. "A Spatial Knowledge Economy," American Economic Review, American Economic Association, vol. 109(1), pages 153-170, January.
    8. Pflüger, Michael & Tabuchi, Takatoshi, 2010. "The size of regions with land use for production," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 481-489, November.
    9. Philipp vom Berge, 2013. "Search unemployment and new economic geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 731-751, June.
    10. vom Berge, Philipp, 2011. "Search Unemployment and New Economic Geography," University of Regensburg Working Papers in Business, Economics and Management Information Systems 454, University of Regensburg, Department of Economics.
    11. Borck, Rainald & Wrede, Matthias, 2009. "Subsidies for intracity and intercity commuting," Journal of Urban Economics, Elsevier, vol. 66(1), pages 25-32, July.
    12. Jolanta Zieziula & Marta Niewiadomska, 2021. "Location factors of e-commerce distribution centers in Zachodniopomorskie Vivodeship based on the example of a selected company," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 9(1), pages 37-51, September.
    13. Chunyan He & Ding Li & Junlin Yu, 2022. "Quantifying the Spatial-Temporal Variation of Population Urbanization and Affordable Housing Land in China," Land, MDPI, vol. 11(2), pages 1-20, February.

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    More about this item

    Keywords

    industry location; capital mobility; labour mobility; agglomeration; commuting; migration;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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