Modeling changes in firm numbers across industries for the United States mountain states

Rural business markets have suffered a declining growth rate share since the eighties and the trend is continuing through the nineties and research has shown that non metropolitan counties are losing business to urban counties. This study uses theory of location analysis to estimate the changes in economic sector concentration at rural areas. It investigates how the change in the number of a particular type of establishment is affected by selected locational factors in sparsely populated counties. Then the coefficients generated for a given sector are transformed into marginal impacts, providing important information related to local policies. A Discrete Normal model is employed using county level data from eight U.S. mountain states. Further work may consider the interdependence of location changes in different sectors and the interactions of different sized establishment changes within single sector. The model could be expanded from the mountain states to the whole United States.