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Quantitative models of establishments location choices : spatial effects and strategic interactions

Abstract : This thesis is breathing new life into the location choice models of establishments. The need for methodological advances in order to more realistically model the complexity of establishment decision-making processes, such as their optimal location choices, is the key motivation of this thesis. First, location choice models use geo-referenced data, for which choice sets have an explicit spatial component. It is thus critical to understand how to represent spatial aspect in location choice models. The final decision of an establishment seems to be related to the surrounding economic landscape. When accounting for the linkage between neighboring observations, the decision on the spatial weight matrix specification must be made. Yet, researchers overwhelmingly apply the Euclidean metric without realizing its underlying assumptions and its alternatives. This representation has been originally proposed due to scarce data and low computing power, rather than because of its universality. In areas, such as the Paris region, where high congestion or uncrossable physical barriers problems clearly arise, distances purely based on topography may not be the most appropriate for the study of intra-urban location. There are insights to be gained by mindfully reconsidering and measuring distance depending on a problem being analyzed. Rather than locking researchers into a restrictive structure of the weight matrix, this thesis proposes a flexible approach to intimate which distance metric is more likely to correctly account for the nearby markets depending on the sector considered. In addition to the standard Euclidean distance, six alternative metrics are tested: travel times by car (for the peak and off-peak periods) and by public transit, and the corresponding network distances. Second, what makes these location choices particularly interesting and challenging to analyze is that decisions of a particular establishment are interrelated with choices of other players.These thorny problems posed by the interdependence of decisions generally cannot be assumed away, without altering the authenticity of the model of establishment decision making. The conventional approaches to location selection fail by providing only a set of systematic steps for problem-solving without considering strategic interactions between the establishments in the market. One of the goals of the present thesis is to explore how to correctly adapt location choice models to study establishment discrete choices when they are interrelated.Finally, a firm can open a number of units and serve the market from multiple locations. Once again, traditional theory and methods may not be suitable to situations wherein individual establishments, instead of locating independently from each other, form a large orgnization, such as a chain facing a fierce competition from other chains. There is a necessity to incorporate interactions between units within the same and competing firms. In addition, the need to state a clear difference between the daytime and nighttime population has been emphasized. Demand is represented by pedestrian and car flows, the crowd of potential clients passing through the commercial centers, train and subways stations, airports, and highly touristic sites. The Global Survey of Transport (EGT 2010), among others, is of service to reach this objective. More realistically designed location choice models accounting for spatial spillovers, strategic interaction, and with a more appropriate definition of distance and demand can become a powerful and flexible tool to assist in finding a befitting site. An appropriately chosen location in turn can make an implicative difference for the newly-created business. The contents of this thesis provide some useful recommendations for transport analysts, city planners, plan developers, business owners, and shopping center investors.
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Submitted on : Wednesday, July 11, 2018 - 11:59:06 AM
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  • HAL Id : tel-01835289, version 1



Sabina Buczkowska. Quantitative models of establishments location choices : spatial effects and strategic interactions. Economics and Finance. Université Paris-Est, 2017. English. ⟨NNT : 2017PESC0052⟩. ⟨tel-01835289⟩



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