In class, we discussed Downs' spatial location theory explaining why firms will set up next to one another in order to capture the greatest portion of the customer base possible. If these two firms have identical outputs, uniform distribution, and easy spacial mobility, then they will relocate next to one another in order to limit the distance that the average customer travels in the hopes of increasing their consumers. In my Real Estate Analysis class, the central place theory and opposing centripetal and centrifugal forces were the main focuses in our discussion of the system of cities. The 3 primary centralizing forces are economies of scale, agglomeration, and positive locational externalities. Economies of agglomeration details that there are cost and productivity advantages to the clustering of firms in addition to the increased opportunity from learning from other's productivity and efficiency. Positive locational externalities occur when firms benefit from nearby locations of others without the first capturing all benefits for itself.
The development of Northern Virginia presents a prime example of the combination of economies of agglomeration and the spatial location theory from construction of homes to tech firms. Construction firms are competing to build neighborhoods close to each other to capture the best school systems hence enticing more homebuyers. Tysons, Reston, and McLean are cities competing for consulting firms and government contractors due to their proximity to DC. My internship at MITRE in McLean was located directly next to competing government contractor Northrop Grumman: a key example of Downs' spatial location theory explained by centripetal forces encouraging corporations to locate close together.
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