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Location Theories and Business Location Decision: A Micro-Spatial Investigation of a Nonmetropolitan Area in Canada

Diego Legros (), Jean Dubé, Cédric Brunelle and Diego Legros
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Diego Legros: LEDi - Laboratoire d'Economie de Dijon - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper draws on location theories to statistically identify the relationship between the location of individual business establishments and the characterization of their local economic environment. Taking a microspatial perspective, the paper develops indicators from distance-based measures (DBM) to serve as independent variables in a discrete choice model (DCM). Using a 2006 database of individual business establishments in the Lower-St-Lawrence region—a coherent, nonmetropolitan subsystem of cities in the province of Québec, Canada—we provide an empirical analysis of the determinants of individual establishments' location decisions in relation to their main economic activity within a random utility model (RUM) framework. The results show that distance to nearby centers, co-location (specialization), and the size of establishments are statistically related to location decisions. However, unlike previous studies, it is also found that discrete location choices of business establishments in service dustries are not necessarily influenced by economic diversity or co-location, whereas manufacturing firms' location decisions are not impacted by distance to markets. All told, we believe the results provide further evidence of the importance of scale in the study of business location decisions.

Keywords: location decision; spatial distribution; regional development; spatial analysis (search for similar items in EconPapers)
Date: 2016
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Published in The Review of Regional Studies, 2016, 46

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Handle: RePEc:hal:journl:hal-01338639