The spatial distribution of economic activity in Melbourne, 1971–2006

Abstract

This paper reports an empirical analysis of the distribution of employment by industry in Melbourne and how this changes over time. Depending on the nature of the industry being considered, two main patterns of spatial behavior are found, population-related dispersion and centralization. A methodology for estimating the benefits of centralization is developed and applied. Centralization benefits are highest for business services and other high-level services, supporting the view that the benefits of concentrating in the central business district are related to knowledge creation and exchange. Other forces, such as competitive pressure, land prices, and colocation with other industries, play only a minor role in determining the spatial distribution of industries, at least at the spatial levels used here. The implications of these findings are discussed.

Keywords:

• employment
• spatial economics
• polycentricity