6 Industry II, Local Theory Flashcards
Which location factors are important for the different branches?
Raw material:
- Energy (brown coal, water),
- Chemical industry,
- Vegetable
- why: Weight losing industry, energy resources, Perishables
Agglomeration:
- IT,
- Microeletronic
- why: R&D institution, close to supplier
Merket:
-Food industry
-consumer goods
why? perishables, close to market
Transportation:
- Shipbuilding Industry,
- refinery,
- petrochemistry
- why: harbor, river, pipelines
Types of location factors?
There are 2 types of Location factors Hard location factors - quantifiable - influence cost calculation of a firm -taxes, deliveries, subsides
Soft location factors
- cannot be integrated into the cost calculation of a firm
- culture, education
Physical Factors:
- Land (location, size, form, cost)
- Raw Material (Ubiquitous, Localized)
- Power / energy
Human Factors
- Labour (cost, wage level, skills, mobility, regulation)
- Transport
- Market (population size, infrastructure, large labour force)
- Technology (localized factor)
- Capital
- Behavioral factors (full knowledge of information, rational)
- Government policy (laws, taxes, ensure regional economic -balance, efficient utilization of resources)
- Agglomeration (industrial linkage, more cities near)
Location theories
who produce what goods in which location why?
based on the interplay and balance of various factors
concepts and spatial conclusion are still relevant for today’s industrial location decision
What are location factors?
Factor that are different in different place and influence the location.
location factors explain why a company produce in that place and not in another
Least-Cost Theory from Alfred Weber.
Optimum plan location: minimization of three cost categories
1 Relative transport costs (optimum location where costs for transporting material to factory and finished good to make lowest)
2 Labour costs (extension of the model)
3 Agglomeration costs (extension of the model)
Least-Cost Theory from Alfred Weber: Locational Triangle
To find the least transport costs location
Location at which all forces balance each other represent the last cost plant location
Least-Cost Theory from Alfred Weber. Discussion
location takes place in an isolate region (no external influences) composed of one market
the space is isotropic (no variation in transport costs, look only at the distance)
Markets are located in a specific number of centers
also possible to introduce rings that connect equal transportation costs for one good –> so to find influences of labor costs and agglomeration
transportation costs are not just a matter of distance
Homo economicus rather a satisfiezer
ignoring other location factors
Good explication of location of iron and steel industry
Weight loosing products
resources orientation
iron, coal, oil, gas
Gaining weigh products
market orientation (beer, mineral water)
ubiquitous goods
water
can be found in any location
explain the process in the steal industry
18 jh. ore orientation
19 jh. cole orientation
20 jh. Located next to the cost line
ende 20 jh. International division of labor
