Received: 2022-03-24  |  Accepted: 2022-08-09  |  Published: 2022-09-30

Title

Agglomeration decay in rural areas


Abstract

Spatial proximity to other economic activities – occasionally labeled as 'market access' and 'economic density' – is associated with good economic performance. How the impulses from economic activities diminish over space is known as 'agglomeration decay' or 'distance decay'. Although market access functions and the associated agglomeration decay constitute an important topic within spatial economic research, the phenomenon is seldom studies in a rural setting or addressed by non-linear estimation techniques. In this paper, we estimate the market access function in the relatively rural regions of Southern parts of Norway. We approximate market access in the national road network by alternative market access functions with power and exponential distance decay, applying ordinary non-linear least squares (NLS) and non-linear mixed effects (NLME). We apply labor productivity as the outcome variable, employment and population as alternative measures for potential market connections and traveling time as distance measure. In the regression, we control for capital intensity, industry structure and annual growth trend, as well as mixed effect in case of the NLME model. Compared to previous findings in the literature, we find evidence of relative sharp agglomeration decay in a rural setting, involving power and exponential distance decay parameters of about 2.3 and 0.07 respectively. Comparisons of the log likelihood from the estimation of market access functions suggest that exponential distance decay involve a slightly better fit than power distance decay. In addition, employment involves slightly more explanatory power than population as a measure for potential market connections.


Keywords

Urban economics, rural economics, productivity, wider economic impacts, market access, road constructions, agglomeration decay, distance decay


JEL classifications

D24 , F15 , O18 , R11 , R12 , R42


URI

http://jssidoi.org/ird/article/111


DOI


HAL


Pages

139-155


Funding

The paper was funded by the Research Council of Norway, partially through the program, the 'Industrial PhD-Program', and partially through the research project 'Impact' on wider economic impacts.

This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License

Authors

Holmen, Rasmus Bøgh
Institute of Transport Economics, Oslo, Norway https://www.toi.no
Articles by this author in: CrossRef |  Google Scholar

Journal title

Insights into Regional Development

Volume

4


Number

3


Issue date

September 2022


Issue DOI


ISSN

ISSN 2345-0282 (online)


Publisher

VšĮ Entrepreneurship and Sustainability Center, Vilnius, Lithuania

Cited

Google Scholar

Article views & downloads

HTML views: 911  |  PDF downloads: 348

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