Firm Location Models and Cluster Analysis

A situation where one factor (A) positively influences another (B), but B negatively influences A, leading to a balance or equilibrium.

The idea that population density can cause negative consequences, like the spread of diseases, due to increased interactions and transmission.

The model explains trade between countries by using the concept of gravity, where larger economies attract more trade and closer countries experience more trade.

A measure of the distance between two locations, impacting transportation costs and economic activity.

The economic size of countries, measured by their GDP, which influences their trade potential.

The cost associated with moving goods between locations, influenced by factors like distance and infrastructure.

A mathematical equation that uses economic size and distance to predict trade flows between countries.

Measures the extent to which a specific industry is concentrated in a few locations, such as a city, region, or country.

Examines how a larger part of the economy, like a whole sector or all economic activity, is distributed across space.

A situation where a primary industry, like manufacturing, is intensely concentrated in a few core regions, leading to a shortage of economic activity in other regions.

An economic model with low concentration, where one industry is evenly distributed across all regions. This means each region produces everything it consumes, but at a lower cost due to only dealing with production costs.

A combination of high specialization and high concentration, suggesting a region focused on a specific industry, with a large number of related businesses clustered together.

An economic model with high specialization but low concentration, driven by the distribution of natural resources, leading to industries being spread across different regions, each focused on a specific resource.

The EU's economic policies are influenced by two factors: controlling concentration and agglomeration, particularly in technology and development sectors, and promoting free movement, including easy migration. However, language barriers still pose a challenge, limiting labor mobility within the EU compared to the US.

Firms aim to maximize their market areas and revenue by strategically choosing their location.

Space itself is seen as a valuable resource, not just an obstacle to overcome.

The benefits gained when firms locate close to each other.

Benefits from clustering together include access to skilled labor, shared resources, and knowledge transfer.

Knowledge easily spreads within a cluster, benefiting all firms.

Forces that pull firms and workers together, such as access to resources and markets.

Forces that push firms and workers apart, such as competition and high land prices.

The outcome of agglomeration depends on the balance of centripetal and centrifugal forces.

A situation where a location becomes dominant in an industry even if it wasn't the ideal choice initially.

Dynamic processes in agglomeration can lead to sub-optimal outcomes due to increasing returns in a location.

A production process where the firm produces a fixed amount of a single product, which is then transported to the market.

A production process where the firm uses various inputs, but only one input is transported from its source to the production facility.

A production process where the firm produces its fixed output with fixed amounts of each input, meaning there's no flexibility in changing the input ratio.

The firm's production is so small that it doesn't impact the prices of its inputs.

The cost of transporting inputs from their source to the production facility.

The cost of transporting the finished product from the production facility to the market.

A transport cost structure where the cost per unit of distance increases as the distance increases.

A transport cost structure where the cost per unit of distance decreases as the distance increases.

The optimal location for a firm is where the total transport cost is minimized.

A location where either the source of input or the market is located.

A location somewhere between the source of input and the market.

A situation in which firms cannot improve their location any further, even though it may not be the most efficient or socially optimal. It occurs due to the balance of competitive forces and the tendency of firms to minimize costs and maximize their market areas.

A situation in which several firms locate near each other even if there are no advantages in doing so, such as shared knowledge or labor. This occurs because of competition and minimizing transportation costs, leading to more optimal market areas.

A model that explains the pricing behavior of firms based on distance and transportation costs. It assumes that the price increases linearly with the distance from the firm's location, creating a 'Martini Glass' shape on a graph.

Individuals residing close to the firm's location benefit from lower prices, while those located farther away pay higher prices due to transportation costs. The equilibrium point, while seemingly the best location for firms, may not always be the most beneficial for social welfare.

While the equilibrium in location may favor firms by minimizing costs and maximizing market share, it may not always be the most beneficial for consumers as they may have to travel further to reach the firms, leading to higher overall costs.