Location and the Theory of Production Get access Leon N. Moses Leon N. Moses Harvard University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 72, Issue 2, May 1958, Pages 259–272, https://doi.org/10.2307/1880599 Published: 01 May 1958

T HIS paper contains a model that emphasizes the intimate connection between interregional trade and the location of economic activity. The author has blended input-output and linear programming techniques in order to achieve substitution and optimization within a general equilibrium framework. What emerges is a multi-region, multi-commodity, empirical study in comparative advantage. To the author's knowledge, it is the first such study. The Census regions of the United States are the areas analyzed. However, the model can be applied to most groupings of regions for which transfer costs rather than artificial restrictions are the major impediments to trade. It also seems likely that a related approach could contribute to understanding the problems of adaptation which confront members of the European Common Market and other contemplated economic unions. As mentioned above, the model synthesizes two approaches to interregional analysis: linear programming as applied to transportation problems, and regional input-output methods. These two techniques have been applied to quite different problems in the past. Three things are taken as given in the typical linear programming transportation study: (i) quantities of a specified good that are available at a number of originating points; ( 2) quantities of the good that are required at a number of destinations; (3) the cost of transporting a unit of the good from each origin to each destination. The problem is to find a network of trade which will satisfy the requirements with a minimum total expenditure on transportation. Thus, the transportation model concentrates on an individual good and sDecifies nothingz so far as interindustry relationships are concerned. It begins with known regional production and consumption and determines the network of trade for a specified good. Regional input-output techniques emphasize the interconnections between industries. Their aim is to determine outputs and requirements of all goods in all regions. To accomplish this, these studies have found it necessary to make assumptions regarding patterns of trade. In one way or another they have treated trade patterns as a datum. It is precisely this aspect of regional input-output analysis that is changed in the present study. Trading patterns as well as regional outputs and requirements of all goods are determined. The model involves the introduction of alternative production techniques and substitution into input-output analysis. This substitution takes place between regions. However, the model can be adapted to permit substitution between industries and between different technological layers of the same industry. The paper is divided into three sections. The first contains a description of the basic model. The second contains a brief explanation of the data and computational difficulties and how these difficulties were overcome by making adjustments in the model. The final section contains some of the empirical results and an analysis of these results. Thus, the first section will help the reader to comprehend more readily the empirical analysis and the reasons behind some of its restrictive assumptions. It also brings to light certain important issues which the empirical analysis must ignore. The second section, on the other hand, will help the reader to understand the process whereby the conceptual scheme was converted into an empirical study.

This paper takes a fresh look at discrete choice theory by observing that decision makers can deliberately blend discrete alternatives within an extended planning honrzon. Multinomial logit and generalized probit models are developed and their properties examined. These are then estimated and compared to the traditional myopic model using the travel diaries of a sample of commuters from Seoul, Korea. The new models yield travel cost elasticities which are substantially lower than those of the traditional approach.

A large literature has grown up in urban economics in the last decade. It can be broadly classified into: 1) studies of the growth, composition (industry and population), and spatial form of urbanized areas; and 2) analyses of problems such as congestion, discrimination in housing and employment, and the fiscal difficulties of cities. This paper concentrates on the former, where the contributions from other disciplines have been as important as those from economics. Part One of the paper deals with models of growth and intra-urban land use. Part Two is devoted to urban simulation and efforts to build large scale statistical models for analyzing, among other things, the impact of alternative government policies on patterns of urban development.

The long-run effects on cities of changes in the cost of moving people are examined. Two kinds of policies are compared: those that increase the cost of travel by car, and those that improve the quality or reduce the price of public transportation. The paper argues that the former are likely to reduce auto travel more quickly. However, these policies are also more likely to cause the economies of central cities to decline more rapidly than they would otherwise. A policy of improving and subsidizing public transportation would tend to slow their rate of decline. So far as the economies of central cities are concerned, there is a set of measures that appears to be most damaging. These are the ones that increase the cost of auto travel to central cities or their core areas relative to the cost of auto travel elsewhere in standard metropolitan statistical areas. Reductions in the supply of downtown parking, special taxes on such parking, tolls to the downtown areas, are examples of such measures.

The last two decades have clearly shown that increased automobile ownership and highway construction can facilitate profound redistributions of population and economic activity within metropolitan areas. These changes are related in a fundamental way to many of the social and economic difficulties of our large, mature, central cities: loss of middle and upper income groups to the suburbs, declining retail sales in downtown areas, erosion of the tax base, shift of manufacturing and service establishments to suburban areas, decline of mass transit service and patronage, and increased traffic congestion. There is a great deal of support for the view that there has been too much highway construction and that the time has come to help public transportation. This paper explores some of the issues involved in a program of assistance to public transportation.

An attempt is made to estimate the effects of income and other variables on the pattern of interregional labor migration in Data for the study are contained in the 1960 Population Census of Ghana. The best information regarding migration is the distribution of population partitioned by age and sex by region of birth and region of residence in 1960. Ghana is divided into 7 administrative regions for which the government publishes population data. All data and analyses in this study are based on these 7 regions. The average income per African laborer was estimated for each of the regions. Measures of urbanization and education were derived from census data. Variables which are important in individual decisions were postulated but the form of individual decision functions was not specified. 2 variables are introduced which may account for systematic differences in individual responses: education as measured by the percentage of adult males in the region who have attended school; and urbanization measured by the percentage of regional population residing in towns of 5000 or more. Density of population was used in place of urbanization in 1 instance. A high proportion of the variation in interregional migration rates was explained by each of the functions. Since there were 7 regions in Ghana and 6 destinations corresponding to each origin the regressions were based on 42 observations. All of the coefficients except those for education were of the right or expected sign. Distance was a strong deterrent to migration. The highest elasticities related to income and migrants clearly tended to move to regions with high wage levels. When urbanization was included migration appeared to be more responsive to the level of home income than to income in other regions. If density was used income in other regions becomes more impoortant. Both origin and destination population were significant variables. Migration increased considerably more than in proportion to population of the home region. Migrants were attracted to regions of large population but the effect was less than proportionate. In this empirical analysis the simple dissatisfaction hypothesis concerning the effects of education was refuted. A larger percentage of educated than uneducated people do migrate especially to cities but the results were inconsistent with this observation. In sum it was demonstrated that migration in Ghana is responsive to income differentials. Distance is a strong deterrent to migration and is most likley to surrogate for differences in culture social organizations langage and transport cost. Education was negatively related to migration.