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Table of Contents | Background
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Spatially Integrated Social Science: Chapter 12
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Business
Location and Spatial Externalities: Tying Concepts to Measures
Stuart H. Sweeney and
Edward J. Feser
Abstract
Spatial externalities among businesses, though notoriously
difficult to measure, are a central concern in urban and regional
economics. Traditionally they - along with closely related
concepts such as agglomeration economies - have been studied
empirically with hedonic models, production and cost functions,
and simplified growth models. More recently, researchers have
begun using direct measures of proximity among businesses
to shed light on the influence of externalities on industrial
location, regional growth, and localized technological change.
The shift has been aided by an explosion in spatially-referenced
economic data, advances in spatial statistics, and the advent
of affordable and user-friendly GIS and related software.
As existing indicators of concentration and spatial association
have been adapted for the economic domain and new ones developed,
the pool of measures useful for business location research
generally, and externalities more specifically, has expanded.
In this chapter, we systematically review and compare a set
of leading indicators of business co-location using standard
data sets and evaluation criteria. Ultimately, our aim is
to assess the capabilities and limits of the measures for
understanding spatial business externalities. More generally,
we discuss a number of common challenges associated with drawing
inferences from cross-sectional spatial data.
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