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1.2.2)   %When selecting the appropriate location in which to set up in the market, an establishment may consider not only the characteristics of a particular area, but also the characteristics of neighboring zones.   The second chapter extends the research on the hurdle model and the study presented in the first part of this thesis. The final decision of an establishment seems to be related to the surrounding economic landscape. When accounting for the linkage between neighboring observations, the decision on the spatial weight matrix specification should be made. Yet, since there exist no solitary claim on the concept of space, the form of the weight matrix is largely debated. One of the problems hides in the definition of distance usually based on the straight-line segment connecting two locations. Euclidean distance is typically used in the empirical literature and has been utilized as well also  in the first chapter of this thesis  to account for spatial spillovers in location choice model. However, Euclidean distance is believed to be only one simplistic possibility out of an infinite number of shortest path relations. Other alternative distance metrics may be proposed when building the spatial distance weight matrices. Geographic factors such as terrain, land cover, infrastructure, and traffic congestion may cause agents not to follow pure Euclidean relations. The Euclidean distance might thus not always be the most relevant one depending on a given problem. Interest in this question dates at least to the 1960s and research on network models in geography (Haggett 1967). There are insights to be gained by mindfully reconsidering and measuring distance. The second chapter investigates establishments location decisions in the Paris region where high congestion, speed limits, or physical uncrossable barriers, such as rivers or industrial corridors can diminish or totally eliminate the linkage between neighboring areas. Rather than imposing a restrictive structure of the weight matrix, this research proposes a flexible toolkit to point which distance metric is more appropriate to correctly account for the surrounding economic landscape. A probabilistic mixture of two ”mono-distance” hurdle-Poisson models is developed. Each model’s latent class uses a different distance representation to incorporate spillover effects in location choices of establishments from several activity sectors. Seven distance metrics are considered: Euclidean distance, two road distances (with and without congestion), public transit distance, and the corresponding travel times. This methodology allows to capture the diversity of agents’ behavior, i.e., to distinguish establishments which are more time- or more distance-oriented given location.