Modelling spatial patterns of economic activity in the Netherlands

TL;DR

This paper introduces an agent-based model of firm development in the Netherlands that captures spatial economic patterns by incorporating behavioral rules and locational preferences, improving understanding of concentration dynamics.

Contribution

It presents a novel agent-based model that simulates structural changes in spatial economic systems considering proximity effects and firm behaviors, calibrated with historical data.

Findings

Model accurately predicts historical spatial configurations.

Incorporates firm preferences based on agglomeration, accessibility, and congestion.

Provides a tool for policy analysis of spatial economic development.

Abstract

Understanding how spatial configurations of economic activity emerge is important when formulating spatial planning and economic policy. Not only micro-simulation and agent-based model such as UrbanSim, ILUMAS and SIMFIRMS, but also Simon's model of hierarchical concentration have widely applied, for this purpose. These models, however, have limitations with respect to simulating structural changes in spatial economic systems and the impact of proximity. The present paper proposes a model of firm development that is based on behavioural rules such as growth, closure, spin-off and relocation. An important aspect of the model is that locational preferences of firms are based on agglomeration advantages, accessibility of markets and congestion, allowing for a proper description of concentration and deconcentration tendencies. By comparing the outcomes of the proposed model with real world data, we will calibrate the parameters and assess how well the model predicts existing spatial configurations and decide. The model is implemented as an agent-based simulation model describing firm development in the Netherlands in 21 industrial sectors from 1950 to 2004.