The developmental impacts of the Madrid metro line 12 on retail activities around stations

Firms, when making decisions about their location, tend to maximize or minimize certain objectives, which depend to some extent on the nature of the business. For example, while some industries may seek for cost minimization at their location (i.e., manufacturing firms), others may be willing to pay more due to location, in order to maximize profits (i.e., retail stores) (Erickson and Wasylenko, 1980). This is known as industrial location theory, first proposed by Albert Weber around 1940. "Transfer oriented firms" are the ones that minimize transport costs, and "resource and market oriented firms" the others (Beckmann, 1999; Blair and Premus, 1993). As explained by White (1975), only in a flat land, with a uniform environment of population and income, firms selling goods would be equally distributed. Nowadays, it is widely accepted that the location of businesses depends on a combination of factors that include, among others, firm agglomeration, labour market characteristics, transportation, land market, type of firm and enhancement of environmental quality (Banister and Berechman, 2001). Agglomeration indicates that certain types of firms take advantage of being close to other firms at a particular location in urban space. If different industrial sectors are not located randomly but rather follow a profit maximizing criteria, taking advantage of physical proximity to related firms, these areas become economic poles (Feser and Sweeney, 2000; Maoh, 2005). On the other hand, authors such as Mori and Nishikimi (2002) point out that there is a process of reciprocal reinforcement between firms' agglomeration and transportation.