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industrial interdependence.
industrial dispersal.
22
decisions, as well as of the conditions needed to arrive at a
early sixties can be placed under three main classes. The first
analyse only a few firms they are more concerned with individual
23
2.1 Least Cost Theories of Location
deciding location.
24
tried to provide a theory of location which is concerned in
analysis.
1
intra-regional location (agglomerating factor) . He found three
costs and labour costs - but for analysis, raw material cost
2
fluctuations are included within transport costs. Weber's plan
1
A. Weber, Alfred Weber's Theory of Location of Industry
Translated by C.J. Freidrich; University of Ch"icago Press;
Chicago, 1929, pp. 23-25.
2
Ibid, pp. 25-34.
25
The basic organising principle of this theory is that industry
26
that assigned to a bulky good which costs only $ 0. 25 per ton
mile to transport.
3
classified in two ways. First, materials may be either
3
Ibid, pp. 50-53.
27
deposit, but only if its weight is greater than the combined
4
weight of all other materials and of the product.
limited supply and that the location choice of the firm . may
4
Ibid, pp. 59-61.
5
Ibid, pp. 72-73.
28
Weber points out that industry must actually locate at a
site if the labour cost saving are greater than the increment in
that is, if
(W 1 - W2 )h > (d 2 - d1) c
29
If the alternative site is inside the critical isodopane the
6
Ibid, pp. 120-124.
30
Agglomerative factors include (i) economies of scale within a
to minimise
n
c I (d 2 j - d 1 j)
j=l
31
material choices. The extent of agglomeration depends on the
7
Ibid, pp. 135-153.
32
situation. From this condition follows his treatment of the
and price are then given. However, it can be readily shown that
least cost locations. Further, not only must firms analyse the
Demand varies with price, and with location chosen. The greatest
9
point of lowest cost. Weber's assumption of space and of
8
M.L. Greenhut, Micro Economics and the Space Economy, Scott
Foresman, Chicago, 1963, pp. 55-76.
9
A. Losch, op. cit., pp. 27-31.
33
perfect competition are inconsistent and permit only a partial
has no effect on costs and that the firm uses the same input mix
10
Hoover.
are further away from the production site than low cost sources.
Hoover points out that this is no solution, since Weber had not
yet found the production site; from what point should the high
10
E.M. Hoover, Location Theory and the Shoe and Leather
Industries, Harvard Univ. Press, Cambridge, Mass., 1937,
pp. 13-21.
11
Ibid, pp. 37-41.
34
analysis is that he does not analyse the causes of labour cost
cheaply.
12
Ibid, pp. 89-93.
35
13
Finally, Hoover quotes a criticism of Palander' s. Weber
any one firm to move unless it is certain that its partner will
co-operation from two fi~~ which are locating at the same time.
Palander also argues that each firm desires that the agglomera-
13
Ibid, p. 93.
36
from Weber, and a number of his concepts and analytical devices
14
have been greatly extended - in particular, his isodopanes" .
14
D.M. Smith, Jndustrial Location An Economic Geographical
Analysis. John Wiley and Sons, New York, 1971, p. 74.
15
Ibid, p. 75.
37
industries first, with the location of deposits given, and
attempts to find the area that each producing point will serve.
commodity from the source that offers the lowest delivered price
and the boundary between the market area of two producers will
16
E.M. Hoover, op. cit., p. 43.
38
Weber by showing how different sections of the market will be
likely, if the fact that transfer costs are actually less than
39
In considering, production costs, Hoover follows Weber's
costs.
17
M. L. Greenhut, Plant location in Theory and ~n Practice,
University of North Carolina Press, Chapel Hill, N.C. I
1956, p. 17.
40
than with the demand factor. Greenhut has also criticised Hoover
18
A. Losch, op. cit., p. 2.
41
which revenue is greatest. He points out "Weber's solution for
19
Ibid, pp. 28-29.
42
(1) The location of every individual must be as advantageous as
firm).
firms.
43
for sale, then his sales area will be circular, bounded by a
sell any beer at all. But if one farmer can produce a surplus so
geometrical forms that could occupy all space, the hexagon has
the highest demand per unit of area and minimises the total
distance from its centre to all points within the market area.
arise for each industry, with the size of market area varying
reduced.
44
Christaller also tried to develop a theory of central
population.
20
H.W. Richardson, Regional and Urban Economics, Pitman
Publishing Ltd. London, 1979, p. 73.
45
Losch has also been criticised on the ground that his ideal
21
S. K. Holland, Capital Versus the Regions, Macmillan,
London, 1976, pp. 7-12.
46
22
linear market duopoly model developed by Hotelling. He assumes
are free to locate anywhere and can relocate at zero cost. The
PA + ex = PB + cy.
Thus,
d = a + b + x + y.
22
H. Hotelling, "Stability in Competition", Economic Journal,
39, 1929, pp. 41-57.
47
is) B' s profit-maximising location will be determined by the
function
Max n 8
is given by
1[ =-
c (d+--
a-h)::
A 2 3
and locates immediately next to him, but on his other side. This
quartile.
48
Although Retelling's analysis is elegant and correct within
23
as Lerner and Singer point out consumers have infinite incomes.
the market cannot apply to more than two sellers, for if (say)
three sellers locate at the centre, the middle one can then make
no sales.
23
A.P. Lerner, and H.W. Singer, "Some notes on duopoly and
spatial competition", Journal of Political Economy, 45,
1937, pp. 145-186.
24
A. Losch, op. cit., pp. 72-75.
49
theories. Through his two books Plant Location in Theory and in
Practice (1956) and Micro economics and the space Economy (1963)
50
consumption, since any rise in price with freight costs would
for a firm's product, the more dispersed production will be. But
transport costs to the consumer will make for dispersal) and the
51
personal cost reducing and personal revenue increasing factors,
processing costs) ,
research.
52
-psychic income', a purely subjective consideration, introduces
25
P.A., Wood, "Industrial location and linkage", Area, 2,
19 6 9 , pp 3 2 - 3 9
0 0
53
Secondly, empirical studies of entrepreneurial decision
manner which ensured that they did not have to make locational
54
were not reflected in reality. Firstly, decision-makers did not
choice, nor, even in the largest enterprises, did they have the
better the information and greater the ability to use it, the
more likely it was that the location chosen would lie at, or
location well away from optimal one, in the full knowledge that
profits were not being maximised. There are two reasons for this
26
A.R. Pred, Behaviour and Location Foundations for a
Geographic and Dynamic Location Theory, Part I and Part II,
Lund Studies in Geography, Series 13, 27 and 28, 1967,
1969.
55
which social or environmental attributes outweighed, to a
56
very large enterprises in using their economic and political
.
requ1re d . 27 What was distinctive about this approach, she
of location.
27
D.B. Massey, "A critical evaluation of Industrial Location
theory". In F.E.I. Hamilton and C.J.R. Linge (eds.),
Spatial Analysis, Industry and the Industrial Environment.
Volume I, Industrial Systems, John Wiley, Chichester,
1979, pp. 57-72.
57
be the case if the theory is logically flawed, if it assumes
28
past approaches or intellectual traditions".
28
D.M. Smith, op. cit., p.l09.
58
motivations and actions found· in practice has eluded even its
golden rule of science that you do not throw away one theory,
29
replace it 11 •
31
close functional linkage". He goes on to state there is little
29
D. Harvey, "Review of Behaviour and location", Geographical
Review, 59, 1969, p.312.
30
P.M. Townroe, "Approaches to the Study of Industrial
Location", Massey and Morrison, 1975, p. 34.
31
P.A. Wood, op. cit., pp. 32-33.
59
But refuting this charge Smith points out that difficulties
32
and flexibility of extended Weber model is appreciated".
quite justified.
~
32
D.M. Smith, "On throwing out Weber with the bath water : A
note on industrial location and linkage", Area, 2, 1970, p.
16.
60
Another point of criticism about classical theory is that
33
rendered it impotent".
33
P. Dicken,w "A note on Location Theory and the large
Business Enterprise", Area, 9, 1977, p. 138.
34
Ibid, p. 143.
61
2.7 Industrial Complex Analysis
strategy.
62
complex. An industrial complex may be defined as "a set of
35
W. Isard, Methods of Regional Analysis, Cambridge, Mass.,
MIT Press, 1960, p.377.
63
appropriate structure for possible industrial complexes, while
64
complexes at three locations, and for yet another
65
calculation. Thus, any comparative conclusions in which these
caution.
has relevance and can yield valid empirical materials for many
66
understanding and projecting an inter-regional system of
planning strategy.
Ibid. p. 411.
I
operations.
69
The close relationship between scale of operation,
70
costs of production in the industry decline. This could lead
72
the problem of just how to use this concept as a tool of
planning.
42
H.W. Richardson, op.cit., p.l66.
74
increasing concentration of population and economic activities
4 .
A. Uday Sekhar, Industrial Location Policy: The Indian
Experience - World Bank Staff Working Papers Number 620.
75
spread. In order to identify the relative degree of
relative to NDP.
76
According to Uday Sekhar, location decisions of public
many basic and capital goods are produced by the Public Sector
77
According to Uday Sekhar; policies influencing intra-
78
points out that since the trends in industrial location are
79
investment and the prices charged for their utilisation.
80