| Spatial economics is seen as milestone in the study of the manufacturing industry agglomeration..Market potential’s impact on manufacturing industry agglomeration, is worth studying. The creation of new economic geography provides the research of manufacturing industry agglomeration with new thinking. Based on Monopolistic competition model, most of documents focus on analyzing the agglomeration phenomenon itself. Studying the impact of agglomeration on economic development by using models and indications, usually subordinates to to analysis of the internal influence.However, apart from the theory, as China itself, Core-Periphery rule and business space location decision are affected by market potential. This essay is aiming at by integrating Traditional spatial economics, proposing a gradual analysis structure of how market potential affects manufacturing industry agglomeration. By using The empirical analysis tool, the essay has obtained each of China’s 29 provinces’ degree of market potential’s impact on manufacturing industry agglomeration.In theory, the essay concludes how manufacturing industry agglomeration is formed. In detail, the process of manufacturing industry agglomeration is a long-run circulation which includes market potential, industrial effect and government factors. As to market potential, the essay includes market demand and transportation cost. The greater market demand exists, the greater local Market potential is. At the same time, considering foreign Investment’s influence, outer-region market potential is reflected by outer-region transportation cost and market demand. Based on Spatial economics’s iceberg cost model, the essay demonstrate how local profit grows with Market potential increased and how local agglomeration increases motivated by people’s seeking maximum Profit.In empirical research, by using last fourteen years’ indications and statistics, the essay tests the stability of the model. From basic market potential factors to Spatial economics market factors, at last it also includes government factors. It has carried an inspection on the stability and significance of how market potential affects manufacturing agglomeration. The result shows that Market potential’s impact on manufacturing agglomeration is a very significant positive correlation. Foreign investment and the size of the urbanization rate both accelerate the formation of the spatial agglomeration of manufacturing. As this essay’s statistic itself, the effect of urbanization rate is weak, and consumption cost has obvious inhibitory effect on agglomeration.According to the empirical conclusion, regional market potential’s increase brings direct growth of local obtainable profit, which produced a promoting effect on vendor selection behavior. This way, Local agglomeration increases. In order to optimize the allocation of resources and promote the formation of industrial agglomeration, when absorbing foreign investment and unveiling support policy,center government should pay extra attention to the role of the market potential at the same time and increase local market demand and optimize regional transportation mode. On the contrary, peripheral region’s government should fully understand the orientation of market economy, and develop a diversified economy, and do not the chase manufacturing agglomeration blindly. |
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