Lec 20-22

Question 1

What type of analysis is RT?

Answer 1

macro-structural analysis

Question 2

in what two ways does the transition to fordism shift world space-economy?

Answer 2

• new industrial spaces rise to prominence (ex silicon valley)
• rupture: window of locational opportunity

Question 3

What are the key locational factors?

Answer 3

□ Pro-business environments
□ Lack of union activities
□ Favorable tax policies (for factories AND workers)
® Ex lower income tax is a way of attracting capital
□ University linkages
® Think how silicon valley is connected to Stanford
□ Cheaper rents or land

Question 4

What are the 2 geographical forces constantly at force?

Answer 4

2 geographical forces constantly at force: decentralization and centralization

Question 5

define dol

Answer 5

fragmentation of tasks and specialization of production functions

Question 6

define roundaboutness. why is it important

Answer 6

degree of complexity of an input/output system. How many steps between the production of raw materials and the production of final outputs

	○ More steps = more potential for geographical diversity

Question 7

define technical and social dol, and what each of them involves

Answer 7

• Technical: how production activities are organized within the firm (the steps within the firm)
  • Social: parceling out of different tasks between independent firms in pattern of vertical disintegration
    ○ Happens between firms
    ○ Vertical disintegration: firms carry out different production activities based on core competencies
    ○ Transactions that link different moments in DoL: there is now an external price-setting mechanism (market comes into play)

technical: involves vertical hierarchy
social: involves vertical disintegration

Question 8

Which point do firms want to reach on the average cost curve?

Answer 8

minimum efficient scale

Question 9

define economies of scale and scope and how they apply internally and externally to firms

Answer 9

of scale: about quantitative increases in level of output
- internal: function of production within the firm
- external: function of cost-sharing between firms

of scope: about the diversity of things you are producing
- internal: function of different tasks undertaken under one roof
- external: function of range of different producers in a given industrial complex

Question 10

if the average cost of disintegrated production activities is above the AC of integrated production activities, you have…

Answer 10

internal economies of scope

Question 11

name 3 reasons to integrate production

Answer 11

for stability and predictability!

1. Easier to manage, everything in-house
   2. Infrastructure savings + moral hazards
   3. Technological interdependencies
   § e.g. steel mills: can recapture energy used for steel production to power another part of the factory

Question 12

name 3 reasons to disintegrate production

Answer 12

for flexibility!
- negative overspills
- possible labour relations problems
- uncertainty in final markets

Question 13

define industrial complexes

Answer 13

large assemblages of specialized and flexible producers interconnected via an intricate web of external transactions

Question 14

What are the 3 forces of agglomeration?

Answer 14

1) Increase efficiency of linkages
2) Pools of local labour that are trained to work in that particular sector
- Easier to find employees, and easier to find a job
3) ‘industrial atmosphere’, spill of knowledge
- e.g. engineers all going to same bar on Friday nights