Traditions in Location Theories


Theory Main Argument
Neo-classical Location subject to the free market forces of supply and demand.
Behavioral Behavior of individual business. Decisions are made with limited information. Sub-optimal location choice.
Institutional External factors such as values and institutions. Mergers and acquisitions.
Economic base Related to the export industries of a region.
Location factors Specific location factors. Agglomerations of economic activity. Regional characteristics.
Cumulative causation Upward spiral where success breeds success (lack of success can lead to a downward spiral).
Core-periphery Regional functions. Relationships between core regions and peripheral ones.
Industrial district Focus on networks, entrepreneurship, innovation, co-operation, flexible production and specialization.
Innovative milieu Importance of the cultural and institutions (synergies among local actors which give rise to fast innovation processes).
Competitive advantage Competition between locations subject to factors related to labor, energy, resources, capital as well as proximity to markets.

Source: adapted from R.W. McQuaid et al (2004) The Importance of Transport in Business’ Location Decisions, Department for Transport.

Since the introduction of formal approaches trying to understand the locational and spatial behavior of economic activities in the mid 19th century several distinctive traditions in location theories have emerged. Location theory expanded in the second half of the 20th century with the development of quantitative methods, and most importantly the diffusion of information technologies that permitted more detailed analytical tools.