A model for location choice of business establishments is presented for the city of Hamilton, Canada. The model is developed with data from the Business Register of Statistics Canada, the Canadian census, and other ancillary geographic information system information that is produced by a private organization called DMTI Spatial. Using the bid–choice theory, the authors estimate multinomial logit models to study and explain the location choice behavior of individual business establishments with fewer than 200 employees for the period 1996 to 1997. Similar analysis is performed for the period 2001 to 2002. Estimation results suggest that commercial business district, highway, and mall proximities; population density; new residential development; and agglomeration economies influence the location decision of business establishments. The results also point to the existence of land use specialization and firm clustering. Using interaction terms in the specification of the location choice utilities is very effective in teasing out the impacts of firm heterogeneity on the location choice decision of individual firms. Finally, the findings from the two periods examined suggest an overall consistency in location choice behavior over time.
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