Firm Location and Regional Externalities : Access to Economic Markets and Information

The problem of firm location can be directly relevant to location decision-making of firms. To attract firms, host regions must have sufficient locational advantages. First, this article studies what constitutes elements for business firms in terms of regional externalities. The structure of a hierarchical urban system may be used to describe the relationship between economies of scale and/or scope and access to economic markets. Then, the argument is expanded to the optimal regional planning strategy according to the type of local characteristics. The final part explores how the limited scale and/or scope of small regions can be spatially competitive against other regions in the borderless global economy. A trigger strategy for cooperative behaviour utilising local allocation of resources is also examined