Work

Market Potential and the Location of Japanese Investment in the European Union

Year: 2004

Type: article

Abstract: This 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.

Source: The Review of Economics and Statistics

DOI: 10.1162/0034653043125257

Authors: Keith Head, Thierry Mayer

Institutions: University of British Columbia, Centre d'Etudes Prospectives et d'Informations Internationales, Université Paris 1 Panthéon-Sorbonne

Language: English

Topic: Agglomeration and Urban Systems

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2032951632

FWCI: 66.22

Cites: 25

Cited by: 829

Related to: 9