Industrial Locations Location Theories

Locations of Economic Activities Primary Economic Activities draw from the land and therefore are located where the resources are located. Primary Economic Activities draw from the land and therefore are located where the resources are located. Secondary Economic Activities have become less dependent on resource location. Secondary Economic Activities have become less dependent on resource location.  Due to: Improvements in transportations and communications. (time-space compression)

Location Theories A large part of economic geography focuses on Location theory: A large part of economic geography focuses on Location theory:  Predicting where businesses will or should be located.  Location theories assume that decision makers ultimate goal is to make as much profit as possible.

Location Consideration When choosing a location businesses take into consideration: When choosing a location businesses take into consideration: 1. Variable costs: energy supply, transport expenses, labor costs, etc. 2. Friction of Distance: The increase in time and cost that comes with increasing distance.  The further a raw material must be shipped to the factory the greater the friction of distance.

Location Models Weber’s Model Manufacturing plants will locate where costs are the least (least cost theory) Theory: Least Cost Theory Costs: Transportation, Labor, Agglomeration Hotelling’s Model Location of an industry cannot be understood without reference to other industries of the same kind. Theory: Locational interdependence Losch’s Model Manufacturing plants choose locations where they can maximize profit. Theory: Zone of Profitability