Industrial Locations Location Theories Locations of Economic Activities

Industrial Locations Location Theories

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

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

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