The Location of New Firms and Life Cycle of Industries.

The purpose of the article is to show how the location of new firms differs according to the life cycle stages of their industry in Spanish cities. In the initial stages of the product life cycle, the products are not totally defined and the innovative activity of firms is high. After that, when the product design is standardized, specific equipment goods appear, the profit margin of firms is reduced and the capacity to innovate also diminishes. The theory of the product life cycle is a suitable instrument for analyzing why new manufacturing plants tend to start up in a small number of places, and why the decisions of new firms as to where to locate change with this life cycle.