Modeling Firms´ Location Choice in an Industrializing City: Spatial Effect of the Generalized Regional Plan

In the fast industrializing China, sustainable regional development requires study on the mechanism of the industry´s spatial distribution. The regional industry development plan was usually thought to be the backbone. However, the relationship between the governmental planning and the development route in reality wasn´t objectively identified. We proposed the generalized perspective on the regional plan, which covers factors not only of the industry policy, but also the infrastructure, land resource, environmental constraints and socio-economic status. The discrete logit location choice model is built based on the behavior of firms and its interactions with local government. The variables are the above factors of the alternative locations (towns). Deyang city´s industrial plants invested during 2003-2007 is used as the empirical data for estimating the parameters. The result implies that the generalized regional plan factors are partially consistent in planning. The location choices resulted from the above factors´ synthetic effect while the 6 sectors are different. The plant-size heterogeneity matters in location choices.