1. Ubiquities Pure Raw Materials Weight Losing Raw Materials
Applications of Weber
Ubiquities
Pure Raw Materials
Weight Losing Raw Materials
Weber Location Model

2. Weber's Industrial Location Model EMPHASIZES SITUATION
Basically Raw Materials and Market are at fixed locations in Space; find the best place to locate the Processing/Industrial Plant
Weber Location Model

3. Alfred Weber
Alfred Weber: Theory of the Location of Industries, 1909 By David Fearon
Alfred Weber ( ), like his older brother Max Weber, started his academic career in Germany as an economist, then became a sociologist. While schooled at a time when European economics was emphasizing historical analysis, Weber was among those reintroducing theory and causal models to the field. He is best remembered, particularly in economics, regional science and operations research, for early models of industrial location (discussed below)...
Weber Location Model

4. Alfred Weber
With the publication of Über den Standort der Industrie (Theory of the Location of Industries) in 1909, Alfred Weber put forth the first developed general theory of industrial location. His model took into account:
several spatial factors
for finding the optimal location
and minimal cost for manufacturing plants.
Weber Location Model

5. Alfred Weber
Weber also applied the model to service organizations such as investment firms, and more broadly to certain political and cultural systems.
The problem of locating industry was particularly relevant at the end of the 19th century, when the industrial revolution was well established, and development of rail transport, energy, telecommunications and urban growth provided more options for distributing firms and components of the manufacturing process.
Weber Location Model

6. Aside about Modeling
If simple models work we can make more complex ones
Simple models require a simplified world
This means assumptions
If you don’t like the assumptions then you can change them and make new ones
The good thing about Weber’s model is you can learn to use it in about 10 minutes
Weber Location Model

7. Weber's Industrial Location Model
 EMPHASIZES SITUATION (transportation)
ASSUMPTIONS
Numerous competitive single plant firms
All have same technology (production possibility curve)  
Transport cost linear function of distance (isotropic plane)  
Choose optimal location in no risk situation  
Infinite demand at fixed price (what kind of elasticity?)  
None sold at higher price, likewise lower price doesn't increase sales  
Implies no scale economies, only spatial economies  
Allows for Super Profits since difference of assembly allows for different returns to capital at different locations
Sell all output at the MARKET CENTER (No transport cost to the consumer’s house – think of Walmart)
Weber Location Model

8. Example Of Infinite Demand at Fixed Price
Supply
Demand
The thought here is that every supplier builds the most efficient sized plant thus supply curves don’t shift.
Weber Location Model

9. Abbreviations
FP – cost of transporting the Final Product to the Market Place
RM – cost of transporting the Raw Material up to the processing plant (somewhere between the “mine” and the Market
TTC – total transportation cost based on the location of the processing plant the total transportation cost to get the final output to the market
Weber Location Model

10. Terms to define Raw materials - two types based on Location
ubiquitous raw material
Available almost everywhere
Air, Water, Land…
localized raw material
Available in very few locations
Gold, oil, research university
Weber Location Model

11. Terms to define Raw materials - two types based on Transportation
pure raw materials (bulk neutral) -- ex. Water, Natural Gas
gross raw materials (bulk loosing) -- ex. gold ore
Gold Ore
Pure Gold
Weber Location Model

12. Terms to define Finished product
bulk loosing – freeze dried blue berries -- almost weightless
bulk gaining – automobile after assembling all parts
Weber Location Model

13. Basic model -- TRANSPORTATION RULES
Basic model -- TRANSPORTATION RULES!!! -- minimize total transportation cost
RM - raw material trans cost
FP - finished product trans cost
TTC - total trans cost
Weber Location Model

14. Ubiquities Most Applicable to Traditional societies
-- Firewood in a forested region
-- Cut the trees close by first, as deforest an move further out price increases based on transportation
Example – Village Nepalese providing wood for their own cooking
Weber Location Model

15. FP – Final Product Delivery Cost
Important things to note
If the FP (final good) is produced at the Market, then there is no (ZERO) transportation cost to get it to the market.
If the final good is produced at a distance from the market (i.e. outside of town) then both FP and TTC equally increase with distance from market
Weber Location Model

16. One Pure Raw Material Example Filtered City Water for City of London
Place filtration system anywhere between the water source and the water main entering the city
No difference in the quantity of water and therefore the cost of transporting it into the city
Weber Location Model

17. One Pure Raw Material RM + FP = TTC
Note that:
RM transportation cost increases left to right
FP transportation cost increases right to left (opposite)
TTC represents the total transportation cost for location a processing plant at a point somewhere between the “mine” and the market.
Always look for lowest TTC
RM + FP = TTC
Total Transportation Cost to get a final output the market is the addition of the cost of moving the raw material to the processing plant and the final output from the plant to the market
Weber Location Model

18. One Pure + Ubiquities Example: Soft Drink Manufacture
-- sugar & flavor plus water
-- note the attraction to the market place
Weber Location Model

19. “Sugar Water” at Market
Weber Location Model

20. Two Pure Raw Materials Example: French Fries Potatoes from one region
Vegetable oil from a different one
Combined at your local fast food franchise
Weber Location Model

21. Two Raw + Ubiquities Can you think of an example for this diagram?
Weber Location Model

22. One Weight Losing Raw Material
The Metal Mining industry is the perfect example here where hammer mills or other processing plants are located next to the mine.
Weber Location Model

23. Copper Ore – Weight Losing
Weber Location Model

24. Weight Losing + Ubiquities
Best location depends on weight lost in processing versus weight gained from Ubiquity.
Weber Location Model

25. Early analog “computer”
Best location dependent on multiple inputs and a single final market
Weber Location Model

26. Two Dimensional Space – Cost Curve: Solution For Two Raw Materials
Weber Location Model

27. Your task
Determine lowest cost production center for Steel manufacturing in early 20th century USA
In groups fill-in work sheet
Weber Location Model

28. EXTENSIONS OF WEBER'S MODEL
1. Space-Cost Curves -- basically the economic "topography" of the landscape enabling multiple factors to find lowest cost ("valleys") production -- ISODOPANES
Weber Location Model

29. EXTENSIONS OF WEBER'S MODEL
2. Smith extension -- Margins of Profitability -- optimal regions for production rather than point -- follows argument similar to von Thunen where farmers can grow same crop at many points but rent captures and super profit
Weber Location Model

30. EXTENSIONS OF WEBER'S MODEL
3. Distortions of isotropic surface -- real world provides additional constraints and opportunities for activities examples include zoning, business friendly atmosphere, industrial inertia (desire of Midwest to maintain an aging industrial structure that belongs in the Third World),...
Weber Location Model

31. Diminished importance of Weber's Model -- three reasons
(1) Freight rates increase relatively more rapidly on finished products than raw materials ($50,000 autos versus iron ore) – favors markets
(2) Transportation cost decline as part of total cost – allows for “footloose” industries (locate practically anywhere)
(3) Brainpower and the internet replaces muscle and machines
? How might we investigate Japan in regards to these points as opposed to American industry? What might this say about Boeing in the near future?
Weber Location Model