Essays on firm dynamics in the Swedish wholesale trade sector

This thesis consists of a summary and five self-contained papers addressing dynamics of firms in the Swedish wholesale trade sector. Paper [1] focuses upon determinants of new firm formation in the Swedish wholesale trade sector, using two definitions of firms’ relevant markets, markets defined as administrative areas, and markets based on a cost minimizing behavior of retailers. The paper shows that new entering firms tend to avoid regions with already high concentration of other firms in the same branch of wholesaling, while right-of-the-center local government and quality of the infrastructure have positive impacts upon entry of new firms. The signs of the estimated coefficients remain the same regardless which definition of relevant market is used, while the size of the coefficients is generally higher once relevant markets delineated on the cost-minimizing assumption of retailers are used. Paper [2] analyses determinant of firm relocation, distinguishing between the role of the factors in in-migration municipalities and out-migration municipalities. The results of the analysis indicate that firm-specific factors, such as profits, age and size of the firm are negatively related to the firm’s decision to relocate. Furthermore, firms seems to be avoiding municipalities with already high concentration of firms operating in the same industrial branch of wholesaling and also to be more reluctant to leave municipalities governed by right-of-the- center parties. Lastly, firms seem to avoid moving to municipalities characterized with high population density. Paper [3] addresses determinants of firm growth, adopting OLS and a quantile regression technique. The results of this paper indicate that very little of the firm growth can be explained by the firm-, industry- and region-specific factors, controlled for in the estimated models. Instead, the firm growth seems to be driven by internal characteristics of firms, factors difficult to capture in conventional statistics. This result supports Penrose’s (1959) suggestion that internal resources such as firm culture, brand loyalty, entrepreneurial skills, and so on, are important determinants of firm growth rates. Paper [4] formulates a forecasting model for firm entry into local markets and tests this model using data from the Swedish wholesale industry. The empirical analysis is based on directly estimating the profit function of wholesale firms and identification of low- and high-return local markets. The results indicate that 19 of 30 estimated models have more net entry in high-return municipalities, but the estimated parameters is only statistically significant at conventional level in one of our estimated models, and then with unexpected negative sign. Paper [5] studies effects of firm relocation on firm profits of relocating firms, employing a difference-in-difference propensity score matching. Using propensity score matching, the pre-relocalization differences between relocating and non-relocating firms are balanced, while the difference-in-difference estimator controls for all time-invariant unobserved heterogeneity among firms. The results suggest that firms that relocate increase their profits significantly, in comparison to what the profits would be had the firms not relocated. This effect is estimated to vary between 3 to 11 percentage points, depending on the length of the analyzed period. 

Methodological issues in applying Location Models to Rural areas

Location Models are usedfor planning the location of multiple service centers in order to serve a geographicallydistributed population. A cornerstone of such models is the measure of distancebetween the service center and a set of demand points, viz, the location of thepopulation (customers, pupils, patients and so on). Theoretical as well asempirical evidence support the current practice of using the Euclidian distancein metropolitan areas. In this paper, we argue and provide empirical evidencethat such a measure is misleading once the Location Models are applied to ruralareas with heterogeneous transport networks. This paper stems from the problemof finding an optimal allocation of a pre-specified number of hospitals in alarge Swedish region with a low population density. We conclude that the Euclidianand the network distances based on a homogenous network (equal travel costs inthe whole network) give approximately the same optimums. However networkdistances calculated from a heterogeneous network (different travel costs indifferent parts of the network) give widely different optimums when the numberof hospitals increases.  In terms ofaccessibility we find that the recent closure of hospitals and the in-optimallocation of the remaining ones has increased the average travel distance by 75%for the population. Finally, aggregation the population misplaces the hospitalsby on average 10 km.

Reindeer habitat selection under the risk of brown bear predation during calving season

The depredation of semi-domesticated reindeer by large carnivores reflects an important human-wildlife conflict in Fennoscandia. Recent studies have revealed that brown bears (Ursus arctos) may kill substantial numbers of reindeer calves (Rangifer tarandus tarandus) in forest areas in Sweden. Several authors have suggested that predation risk is an important driver of habitat selection in wild Rangifer populations where predation is a limiting factor, but little is known about these mechanisms in semi-domesticated populations. We examined the habitat selection of female reindeer in relation to spatial and temporal variations in brown bear predation risk on the reindeer calving grounds and evaluated the simultaneous responses of brown bears and reindeer to landscape characteristics. We used GPS data from 110 reindeer years (97 individuals) and 29 brown bear years (19 individuals), from two reindeer herding districts in the forest area of northern Sweden. Our results did not indicate that reindeer alter their behavior in response to spatiotemporal variation in brown bear predation risk, on the scale of the calving range. Instead, we suggest that spatiotemporal behavioral adjustments by brown bears were the main driver of prey-predator interactions in our study system. Contrasting responses by brown bears and reindeer to clear-cuts and young forest indicate that forestry can influence species interactions and possibly yield negative consequences for the reindeer herd. Even if clear-cuts may be beneficial in terms of calf survival, logging activity will eventually cause greater abundance of young regenerating forest, reducing available reindeer habitats and increasing habitat preferred by brown bears. Domestication may have made semi-domesticated reindeer in Fennoscandia less adapted to cope with predators. Areal restrictions, limiting the opportunity for dispersion and escape, possibly make the calves more susceptible to predation. Also, a generally higher population density in semi-domesticated herds compared to wild populations can make dispersion a less efficient strategy and the reindeer calves easier prey. Overall, the lack of ability of the reindeer females to reduce brown bear encounter risk on the scale of the calving range is probably an important reason for the high brown bear predation rates on reindeer calves documented in our study areas.