On High-Speed Connections and the Location of Activities

Abstract

We study the impact of a high-speed connection between two regional economies on the location of production activities, using the simple plant-location problem and toy networks. As expected, the relative value of fixed production costs to transportation costs is crucial in the determination of facility locations. Less expected is the fairly strong instability observed in the structure of the locational pattern of facilities when the relative value of the fixed costs changes. The construction of a piece of infrastructure has an impact on the regional structure of production provided that it allows for a substantial reduction in transport spending. When scale economies in production are large, one regional center swallows up the other and may eventually become the only production center within the integrated economy.