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Economic Geography Glossary

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Abilene Principle

(origin: Jerry Harvey) a description of a "group's inability to manage its agreement. Nobody wants to reach a particular destination ("Abilene"), but for fear of offending or contradicting each other, they all end up there." [Examples: Bay of Pigs, possibly: last staff meeting] (Senge et al., Fieldbook, p.403)

Acceleration principle; accelerator

suggests a relationship between income and output and the investment effects associated with changing output. The size of the accelerator depends on the marginal capital/outout (C/O) ratio (i.e. how much new investment is needed in response to changing demand for output) and on a variety of other factors influencing investment decisions. Accelerator and multiplier effects tend to be cumulatively intertwined as a result of the multiplier effects of investment activities and the accelerator (investment) effects of multiplier-induced output changes.

Access/ Accessibility

a crucial locational quality expressing the ease with which a location can be reached and interacted with from other locations. A pure spatial accessibility dimension is often complemented by (and interacting with) social and economic dimensions. A good example for the latter would be the accessibility of information for decision-making. "The term accessibility... really means ease of contact -- contact with relatively little friction. The friction of space may be overcome by means of transportation; but transportation involves costs. Rent appears as the charge which the owner of a relatively accessible site can impose because of the saving in transportation costs..." (R.M.Haig, 1926)
Stutz: "A measure of aggregate nearness".
[also: Goodall, p.11 (makes the difference between general and particular accessibility)] [Oxford Dictionary]

Accessibility index (of a node or vertex)

Measures the sum of the number of links needed to connect a node to every other node in the network (via the shortest path, each connection separately counted).

'Adaption' & 'Adoption' dichotomy (Alchian, 1950; Tiebout, 1957)

Important part of A.A. Alchian's and Charles M. Tiebout's rationalization of classical economic theory (and Tiebout for location theory). The argument is that active, deliberately optimal (adaptive) behaviors are not needed for the viability of optimizing theories since economic actors would be either 'adopted' by the competitive environment or would fail. [see also: Krumme, 1969; Hayter, 1997, p.123]

Agglomeration

A geographical concentration of people and/or activities

Agglomeration Economies (of Scale or Scope) (as different from "regions of agglomeration")

Benefits, savings or (average) cost reductions resulting from the clustering of activities.
Generally, the concept of agglomeration economies refers to savings or benefits derived from the clustering of activities external to the "firm" and are therefore part of "external economies". However, as geographers, we may at times be more interested in the "clustering" than in the organizational boundaries of the firm. Thus, what is "external" would depend on the recognized boundaries. For example, any one of the Boeing plants in the Puget Sound area can be said to benefit from the agglomeration of Boeing activities in this area. Thus, such benefits are external to the individual plant (but, of course, internal to the Boeing Company).
Due the diversity of phenomena associated with such agglomeration benefits and the general lack of understanding of agglomeration effects (in spite of a lot of research), further distinctions are appropriate:
  1. agglomeration effects associated with the agglomeration of population and the resulting infrastructure facilities, labor pool and quality of life. (="urbanization economies")
  2. agglomeration effects resulting from the clustering of industrial activities giving rise to an "industrial climate" (with positive and negative effects). (="industrialization economies")
  3. finally, effects which result from the agglomeration of specific activities which favor specialized facilities, labor pools, vocational training, political lobbies etc. (="localization economies")
[Goodall, p.16; Healey & Ilbery, p.88; Other
Agglomeration Literature] [Oxford Dictionary]

AGGLOMERATION ECONOMIES [Geog.207]

Alpha Index

compares the number of actual (fundamental) "circuits" with the maximum number of all possible fundamental circuits; see also: Network Measures

Angel investor

A venture capitalist with a social conscience. Similar to venture capitalists, "angels" are looking for high growth potential with a five-to-ten-year cash-out. "Angel investors often look for 'psychic income beyond just balance sheet and income statement- the chance to help other entrepreneurs, assist with inner city problems... for example. These factors are only frosting on the investors' cakes..." (i.e. entrepreneurs should expect the same diligence from angels as from any other capital source). [Paul Larson et al., The Washington Entrepreneur's Guide., 2nd ed., 1997, p.99]

Anglo-Saxon Bias

Walter Isard's (1956, ch.2) way of characterizing 19th century aspatial economic theory in Britain; in contrast to the "Germanic Bias" in the development of classical location theory.

ANZCERTA

Australia-New Zealand Closer Economic Relations Trade Agreement

APEC

Asia Pacific Economic Cooperation: Members: Members of ASEAN, NAFTA, ANZCERTA, Chile, China, Hong Kong, Taiwan, Japan, South Korea, Russia, Vietnam and Peru.

APPRECIATIVE THEORY (Nelson)

Attempts to structure qualitative notions about the nature of the firm and its activities in a manner less rigorous but richer than at the formal level (Nelson, in Fuchs, ed., Opportunities in Industrial Organization , 1972, p.35)

APPROPRIABILITY PROBLEM (Arrow, 1962)

Problems related to the ability of the firm to capture acceptable levels of benefits associated with the exploitation of its own technological innovations through confidentiality, patents etc. A high degree of appropriability may stem, for example, from cumulativeness of technical advances, and from forms of protection such as lead times and patents. (Dosi & Orsenigo, 1988, p.23)

A priori knowledge (Encycl.Brit.)

Arubaito (jp) = part-time work

Aspiration levels (Katona, Simon)

A personalized set of standards or "aspired to achievements levels". Primary basis for such (presumably changing) personal standards is suggested to be Closely associated with concept of "learning". [see also Hayter, p.138]

Asset Specificity

Refers to the relative lack of transferability of assets intended for use in a given transaction to other uses. Highly specific assets represent sunk costs that have relatively little value beyond their use in the context of a specific transaction. Williamson has suggested six main types of asset specificity:
  1. site specificity
  2. physical asset specificity
  3. human asset specificity
  4. brand names
  5. dedicated assets
  6. temporal specificity
High asset specificity requires strong contracts or internalization to combat the threat of opportunism. Important example: Small subcontractors locating and investing next to only customer who could potentially turn to alternative suppliers (=site- and physical asset specificity).

The most popular example for the consequences of assets specificity has been the relationship between General Motors and Fisher Body between 1919 and 1926. After a 10 year contractual agreement was signed in 1919, GM's demand for closed-body cars increased to extent that it became unhappy with the contractual price provisions and "urged Fisher to locate its body plants adjacent to GM assembly plants, thereby to realize transportation and inventory economies." [Williamson, AJS, p.561] Finally, Fisher Body was merged into GM in 1926 after Fisher had resisted GM's locational demands. As R.Coase recalls, "I was told [by GM officials] that the main reason for the acquisition was to make sure that the body plants were located next to General Motors assembly plants." [R.H.Coase, "The Nature of the Firm: Origin", in: Williamson & Winter, eds., The Nature of the Firm. 1993, p.43.]

Associated Number (Koenig Number)

measures the accessibility (or centrality) of a node by the number of links needed to connect this node with the (topologically) most distant node in the network see also: Network Measures

Asymmetrical information distribution

Parties to a transaction have uneven access to relevant information. Such asymmetry may be based on information impactedness and be hazardous to the transaction.

Autarky

National economic self-sufficiency and independence.

Authority Constraints

Part of Hägerstrand's time-geographic conceptualization. Where and when individual or joint activities occur and who can participate is constrained by what Hägerstrand calls authority constraints which are related to who controls the particular piece of time-space: Working hours; land owners' property rights; zoning; curfew; public transportation schedules and routes; office hours of governments and organizations; etc. (Lloyd and Dicken, Modern Western Society, p.26) | A Dictionary of Geography, Oxford University Press, ) Susan Mayhew 1997

Axiom

Axioms of a theory are proposition which form the set of relationships (and are specific in terms of the direction of the relationships) and are assumed to be true as a basis for argument or inference [but may not be true in actuality] Examples of axioms in location theory: flat plains, linear transport costs, for some: profit maximization.
An axiom is different from a basic assumption which refers to a statement which has been accepted as true on the basis of sufficient evidence. The assumption of truth made in the choice of axioms is simply for the purpose of connecting propositions from which new relationships could be derived. Statements of relationships based on axioms do not carry causal implications. These derived proposed and testable relationships are "theorems".

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