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Econometric Advances in Spatial Modelling and Methodology pp 177–188Cite as

Towards a « Spatialized » Cost of Capital Concept

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Part of the book series: Advanced Studies in Theoretical and Applied Econometrics ((ASTA,volume 35))

Abstract

The economic literature has long been concerned with the location of productive activities in space. The investor is viewed as selecting the region that yields the highest expected value of after-tax profits. The firm considers, among others, the intrinsic characteristics of regions (the factor endowments) as well as any net agglomeration benefits1. By the clustering of activities, externalities are exploited that modify the comparative advantages of regions. Agglomeration economies add to the attractiveness of some locations2. However as firms congregate competition among users may bid up local factor prices (land, in particular) lowering the advantage of congested zones. The individual maximization decision also accounts for any subsidies granted in the different regions and the tax burden on the income from invested capital.

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Authors
  1. Michel Mignolet
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Editor information

Editors and Affiliations

  1. Syracuse University, USA

    Daniel A. Griffith

  2. University of Toronto, Canada

    Carl G. Amrhein

  3. University of Burgundy, Canada

    Jean-Marie Huriot

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© 1998 Springer Science+Business Media Dordrecht

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Mignolet, M. (1998). Towards a « Spatialized » Cost of Capital Concept. In: Griffith, D.A., Amrhein, C.G., Huriot, JM. (eds) Econometric Advances in Spatial Modelling and Methodology. Advanced Studies in Theoretical and Applied Econometrics, vol 35. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-2899-6_14

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  • DOI: https://doi.org/10.1007/978-1-4757-2899-6_14

  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-1-4419-4788-8

  • Online ISBN: 978-1-4757-2899-6

  • eBook Packages: Springer Book Archive

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