Abstract
Most of the underlying theories of facility location and land use models are basically economic concepts, and many of their input/output variables are economic measures. To understand these relationships better, a general knowledge of economic concepts and methodology is helpful. We recognize that theories have been offered by economists to explain the growth and distribution of industrial activities in an area. It is insightful to summarize their experiences—particularly the theories used in regional and interregional economics. This includes such concepts as economic-base theory (or export service theory) of gravitational interaction and theory of interregional flow. Through such a review, one sharpens the focus on the validity and limitations of these analysis methodologies.
We will also outline the basic techniques for evaluating the impact of a proposed policy on transportation systems, utility systems, and zoning codes. When an evaluation measure is often phrased in terms such as cost, benefit, equity, and efficiency, a clear understanding of these terms is necessary. Conversely, when indicators such as opportunity and quality of life are output from the model, they are much more meaningful if one can relate them to the economic theories of cost/benefit and equity/efficiency. Such an understanding would help the inquiring mind to understand the assumptions based upon which the measures are derived. Finally, for the model builder, the review of economic methods would help them configure better models and submodels.
“Two and two the mathematician continues to make four, in spite of the whine of the amateur for three, or the cry of the critic for five.”
James McNeill Whistler
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Chan, Y. (2011). Economic Methods of Analysis. In: Location Theory and Decision Analysis. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-15663-2_2
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DOI: https://doi.org/10.1007/978-3-642-15663-2_2
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