Transportation Infrastructure Impacts on Firm Location: The Effect of a New Metro Line in the Suburbs of Madrid

Firm location decisions are made in consideration to multiple objectives, such as labor force availability, market opportunities, and transportation costs. Many of these factors are influenced by changes in accessibility wrought by new transportation infrastructure. In this paper the authors use spatial statistical techniques and a micro-level data base to evaluate the effects of Madrid’s Metrosur expansion in business location patterns. The case study is the municipality of Alcorcon, which is served by the new metro line since 2003. Specifically, the authors explore the location patterns by different industry sectors, to evaluate if the new metro line has encouraged the emergence of a “Metrosur spatial economy.” The authors results indicate that the pattern of economic activity location is related to urban accessibility and that agglomeration, through economies of scale, also plays an important role. The results presented in this paper provide important evidence to inform efficient transportation, urban, and regional economic planning.

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