Industrial Landscapes Least Cost Location Theory.
-
Upload
dora-hopkins -
Category
Documents
-
view
221 -
download
2
Transcript of Industrial Landscapes Least Cost Location Theory.
Industrial Landscapes
Least Cost Location Theory
Classification of Manufacturing Industries
1. Processing Industries– Initial Processing Industries
• A single raw material.
• Eg. Dairy processing
– Complex Processing Industries• More than one raw material
• Eg. Steel making
Classification of Manufacturing Industries
2. Fabricating Industries– Assembly of a finished or semi-finished produc
t– Eg. Automobile
Least Cost Location Theory
By Weber
Assumption
• Isotropic plain (uniform in culture, climate , economic and political system……)
• Ubiquitous resources are found everywhere
• Some resources are localized
• Transport cost is a function of weight and distance
• Labour has a given pattern of distribution
Assumption
• Markets are fixed at certain specific point
• Perfect competition exists
• Industrialists are economic man
Building of theory
Material Index
Location Triangle
Location Polygon
Isotims
Isodapanes / Critical Isodapane
Varignon Frame
Effects of cheap labour and agglomeration
Material Index
• Material Index
eg. (To produce 10 tonnes cement)
Limestone 11.2 tonnes
Clay or shale 2.8
Coal 3.0
Gypsum 0.25 Total 18.25
---------------------------------------------
Material Index = (18.25/10.00) = 1.825
Material Index
Material Index > 1.0 (weight-loss)Materials oriented industry
Material Index < 1.0 (weight-gain)Market oriented industry
Material Index = 1.0Footloose Industry
Location Triangle
Location Polygon
Isotims – Cost surface
Isodapanes / Critical Isodapane
Varignon Frame
Effect of Cheap Labour
Having cheap labour can save $16 additional transport cost.
Firm will not be moved to L1 but it will be moved to L2
Effect of Agglomeration
Demerits• Transport Costs
– Decline the importance of transport costs– Stepping of Freight Rates– Variations in the Transport Modes
Demerits
Stepping of Freight Rates
Demertis
Transport Rate for 3 main carriers
Demerits
• Isotropic plain is not our real world• Importance of other properties of raw materials• Market is not a fixed point• Perfect competition does not exist• A Static Model• Nature of Industries• Mobile nature of labour• Economic man
Merits
• Founder of modern industrial location theory• Point out transport cost as a key factor to
determine industrial location• Distinct ubiquitous and localized raw materials• Distinct various orientations of different industries• Conceptual instrument for understanding the
locational patterns of industries