Administrative centers and firms location decisions

Abstract

This paper analyzes the location choices of heterogeneous firms using industrial enterprise data from 1998 to 2007, along with map information. The findings suggest that firms with higher initial efficiency are more likely to choose locations near administrative centers in order to capture greater profits, while firms with lower initial efficiency tend to choose more distant areas to minimize costs. The location choice behavior of firms offering a potential explanation for the economic disparity within China's administrative regions and the formation of spatial economic patterns at the administrative level.