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Chapter 9: Transportation and Migration of Firms
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Chapter 9: Transportation and Migration of Firms

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  • 1. Space and Economics Chapter 9: Transportation and migration of firms Author Wim Heijman (Wageningen, the Netherlands) September 8, 2009
  • 2. 9. Transportation and migration of firms
    • 9.1 The concept of gravity
    • 9.2 Linear Programming (LP): Minimizing transportation costs
    • 9.3 Graphs in regional economics
    • 9.4 Markov chains and firm migration
    • 9.5 Application
    • 8.6 Application: Tourism in Slovenia
  • 3. 9.1 The concept of gravity
    • Economic gravity models are analogies of the physical gravitation law developed by Isaac Newton in his book “Philosophiae Naturalis Principia Mathematica” (1687).
    • Interaction between locations is determined by “weights” and distance.
    • Economic weights can be determined in several ways, for example number of inhabitants or GDP.
  • 4. 9.1 The concept of gravity Isaac Newton (1643-1727)
  • 5.
    • 9.1 The concept of gravity
    Generally speaking the interaction between two locations can be described by the following formula:
  • 6. 9.1 The concept of gravity
    • A useful application of the model is the so-called doubly-constrained gravity model :
    This model is solved with the so-called RAS-procedure
  • 7. 9.1 The concept of gravity
  • 8. 9.1 The concept of gravity
  • 9. 9.1 The concept of gravity
  • 10.
    • 9.1 The concept of gravity
  • 11. 9.1 The concept of gravity
  • 12. 9.2 Linear Programming (LP)
    • This technique can be used for minimising transportation costs (target function), with the given constraints of :
    • maximum capacities of the production units and
    • minimum quantities required at demand locations
  • 13. 9.2 Linear Programming (LP)
  • 14.
    • 9.2 Linear programming (LP)
    St
  • 15. 9.2 Linear programming (LP): Simplex Procedure
  • 16. 9.2 Linear Programming (LP)
  • 17. 9.3 Graphs in Regional Economics
    • A graph consists of a set of points and a set of relationships between pairs of points
    • An example of this is the spatial economic main structure in North West Europe
    • The points consist of the main economic regions in North West Europe (Randstad, London etc.)
    • The ‘relationships’ consist of the megacorridors including railways and highways connecting these regions
  • 18. 9.3 Graphs in Regional Economics
    • Figure 9.1: Spatial economic main structure North West Europe
  • 19. 9.3 Graphs in Regional Economics Figure 9.2: Graph of North West European main economic structure
  • 20. 9.3 Graphs in Regional Economics
  • 21. 9.3 Graphs in Regional Economics
  • 22. 9.3 Graphs in Regional Economics
  • 23. 9.3 Graphs in Regional Economics
  • 24. 9.3 Graphs in Regional Economics - Accessibility Index (AI): Sum of Row in Accessibility matrix - The higher AI the more accessible a point is - According to AI Region 4 (Brussel-Antwerp) is the most accessible
  • 25. 9.3 Graphs in Regional Economics
  • 26.
    • Figure 9.3: Tokyo subway map
  • 27. Figure 9.4: Density of European Road Network (kilometres of road per 100 km2 in 2005) 9.3 Graphs in Regional Economics
  • 28. 9.4 Markov Chains
    • The basic framework of the Markov model is a matrix with the observed probabilities, named transition probabilities Matrix p
    • With the help of Matrix p it is possible to move from one state of a system to the following state.
    • Markov chain model is suited to study migration patterns.
  • 29. 9.4 Markov Chains
    • Example:
    • Ireland
  • 30. 9.4 Markov Chains Initial State:
  • 31. 9.4 Markov Chains
  • 32. 9.4 Markov Chains
    • The steady state arrives when the proportional distribution of the firms over the regions remains constant
  • 33. 9.4 Markov Chains
  • 34. Figure 9.6: Fictive proportional distribution of firms over the four Irish provinces over time
  • 35. 9.5: Application: Firm migration in the Netherlands
  • 36. 9.5: Application: Firm migration in the Netherlands
  • 37. 9.5: Application: Firm migration in the Netherlands Figure 9.7: Proportional distribution of firms over the twelve provinces in 2005 and 2095

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