Institut Teknologi Sepuluh Nopember www its ac id
Institut Teknologi Sepuluh Nopember www. its. ac. id WEBER THEORY (Subject: Location and Spatial Analysis) Belinda Ulfa Aulia, ST, MSc DEPARTMENT OF URBAN AND REGIONAL PLANNING 2018 Institut Teknologi Sepuluh Nopember www. its. ac. id
INTRODUCTION • Alfred Weber's work (1909) is considered to have established the foundations of modern location theories. • One of his core assumption is that firms will chose a location in view to minimize their total costs. • This involves a set of simplifications: - location takes place in an isolated region (no external influences) - composed of one market, - space is isotropic (no variations in transport costs except a simple function of distance) - markets are located in a specific number of centers - perfect competition, implying a high number of firms and customers - Several natural resources such are water are ubiquitous (available everywhere) while many production inputs such as labor, fuel and minerals are available at specific locations. Institut Teknologi Sepuluh Nopember www. its. ac. id
Cont’d • According to Weber, three main factors influence industrial location: - transport costs - labor costs - agglomeration forces • Solving Weber's location model often implies three stages; finding the least transport cost location and adjusting this location to consider labor costs and agglomeration forces • Weber examines two things: - In which the point of optimum transport cost can be found - In which labor agglomeration advantages will operate Institut Teknologi Sepuluh Nopember www. its. ac. id
Least Transport Cost Location The least transport cost ➔ The point at which the tonmiles involved getting materials to a place of production and the finished product to the market is at a minimum P : point of production a, b, c : the distances x, y, z : materials in ton Institut Teknologi Sepuluh Nopember www. its. ac. id
Material Index • Activities having a high level of use of raw materials tend to locate near supply sources, such as aluminum factories will locate near energy sources (electricity) or port sites. • Activities using ubiquitous raw materials, such as water, tend to locate close to markets. • To assess this issue, Weber developed a material index (MI) which is simply the weight of the inputs divided by the weight of the final product (output). • If the material index is higher than 1 (MI > 1) ➔ location tends to be toward material sources. • If it is less than 1 (MI < 1), location tends to be toward the market. Weight of Local Material MI = --------------Weight of Final Product Institut Teknologi Sepuluh Nopember www. its. ac. id
Institut Teknologi Sepuluh Nopember www. its. ac. id
Spatial Distribution of Transport Costs ▶ If Labour is cheap ➔ it will divert the factory from Least Transport Cost Location ▶ Isotim is a line joining all places with equal total transport costs for moving either the raw material or the product ▶ Isodapane is a line joining all places with equal total transport costs, i. e the sum of the costs of transporting the raw material and the product Institut Teknologi Sepuluh Nopember www. its. ac. id
ISOTIMS a) Shows the cost of transporting 1 tonne of raw material ( R) as concentric circles. Ex: it will cost 5 t/km (tonne/kilometers) to transport the material to the market. a) shows, also by concentric circles, the cost of transporting 1 tonne to the finished product (P). The total cost of moving the product from the market to the source of the material is again 5 t/km. Institut Teknologi Sepuluh Nopember www. its. ac. id
ISODAPANES c) By superimposing these two maps it is possible to show the total costs. If a factory were to built at X its transport cost would be 7 t/km (i. e 2 t/km for moving the raw material plus 5 t/km for the product). Id a factory built at Y would have lower transport costs of 6 t/km (4 t/km for tha raw material plus 2 t/km for the product). How ever, the LCL in this case may be at the source of the raw material, the market or any intermediate point in straight line between the two because all these points lie on 5 t/km isodapane. Institut Teknologi Sepuluh Nopember www. its. ac. id
Critical Isodapanes and Agglomeration Economies • Weber considered for factors affected production costs: raw materials and transport, labour costs and agglomeration economies. • Weber introduced the idea of critical isodapane as being the point at which savings made by reduced labour costs equaled the losses brought about by extra transport costs. • If the cheaper labour lay within the area of critical isodapane, it would be profitable to move away from LCL in order to use this labour. Institut Teknologi Sepuluh Nopember www. its. ac. id
If Labour is cheap ➔ it will divert the factory from Least Transport Cost Location If cheap labor location (L 1) within “critical isodapane” so it is a more profitable location than the least-transportcost site (P 1). But if it is outside (L 2), P 1 will remain best location. Institut Teknologi Sepuluh Nopember www. its. ac. id
It shows the critical isodapane for three firms. It would become profitable for all the firms to locate within the central area formed by the overlapping of all three critical isodapanes. Agglomeration is when several firms choose the same area for their location in order to minimize their costs. Institut Teknologi Sepuluh Nopember www. its. ac. id
Cont’d ▶ Agglomeration ➔ are treated in much the same way as cheap labor –as something that may divert a factory from the leasttransport-cost poin. The firms find that they could cut their production cost by $20 per unit if at least three of them operated in the same location. Institut Teknologi Sepuluh Nopember www. its. ac. id
Reference Waugh, David. 2002. Geography: An Integrated Approach “Third Edition”. Gloucester: United Kingdom. Institut Teknologi Sepuluh Nopember www. its. ac. id
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Institut Teknologi Sepuluh Nopember www. its. ac. id
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