A New Business Location Choice Model for Transport Demand Forecasting: Theory, Calibration and Application to the Knowledge-based Industries in the London-Cambridge Corridor in the UK



A New Business Location Choice Model for Transport Demand Forecasting: Theory, Calibration and Application to the Knowledge-based Industries in the London-Cambridge Corridor in the UK

Authors

Y Jin, Cambridge University, UK

Description

We report an innovative demand forecasting tool based on theories of scale economy and agglomeration, and tractable formulae using data for detailed industries and zones

Abstract

Robust business location modelling is a prerequisite for realistic medium and long term transport demand forecasts, which is in turn a foundation for dependable appraisals of alternative transport investment, regulatory and pricing scenarios.
Integrated land use activity and transport modelling ? i.e. a joint forecast of activity location and travel demand which take account of the interactions between them ? has been accepted as a sound theoretical approach to medium and long term transport demand forecasting. However, within such models, the representation of business activity location choices (including both transformation of existing businesses and setting-up of new businesses) remains an Achilles? heel: the theoretical models do not reflect such key influences upon business location decisions as economies of scale and agglomeration; the implemented model structures often have little or no empirical basis.
This paper presents a new and innovative travel demand forecasting tool that incorporates business location responses under alternative policy scenarios. Its theoretical formulation is based on New Economic Geography theories concerning scale economy and agglomeration effects, whilst its empirical formulae are tractable and calibrated using empirical data for detailed industry sectors and a large number of geographic zones.
Both passenger and freight demand (including vans) are modelled. The business floorspace rentals provide a lagged feedback to the supply of business floorspace overtime, under land use restraints. Because the new business location models established here incorporates production functions that reflect economies of scale and agglomeration effects, the new business location choice model can be used simultaneously activity location forecasting and assessment of the ?wider?, productivity impacts. Its model structure can also be used to explore hysteresis effects, e.g. in the case of fiscal stimulus in regeneration areas. The application of the theoretical model to the knowledge-based industries (i.e. R&D, creative industries and business services) in the London-Cambridge corridor will be reported.

Publisher

Association for European Transport