Tracking the Size, Location and Interactions of Businesses: Microsimulation of Firm Behavior in Austin, Texas

Firms are key drivers of urban growth along with households, yet data on businesses and commercial vehicle movements can be quite difficult to obtain. An understanding of firm behavior over time is critical in anticipating urban futures and addressing transportation, land use and other concerns. Firm birth and death, migration and location choice are defining events in a firm’s life cycle, and a study of firm evolution requires estimating and applying models for each of these. Such an exercise is hindered primarily by a lack of quality micro-data for businesses. This paper proposes a basic framework for modeling firm demographics using a microsimulation approach. Year 2005 employment point data for the Austin, Texas region and 7 years of aggregate data from the Statistics of U.S. Businesses have been used to simulate firm entry, exit and evolution over time and space. A Markov process is used to anticipate firm growth and contraction, along with logit and Poisson models for firm location choice. Austin’s commercial vehicle survey data are used to estimate commercial trip generation and distribution models, and applications of these are tied to forecasts of firm counts by location over time. Simulation results for both lowand high-growth scenarios suggest an increasing movement of firms towards central zones.