Chapter 9: Transportation and Migration of Firms

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Chapter 9: Transportation and Migration of Firms

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