Location theoRies
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Alfred Webber (1868-1958) developed a basic model explaining where industries would cluster. In his work Theory of the Location of Industries (1909), he focused on specific factors that, according to him, would pull industry to particular locations. In his “least cost theory” he focused on the way of thinking of factory owners, what categories they would want to minimize the costs of, and so came up with three:
•Transportation. “The site where transportation costs are lowest is the place where it is least expensive to bring raw materials to the point of production and to distribute finished products to consumers.”
•Labor. “Higher labor costs tend to reduce the margin of profit, so a factory might do better if it is farther away from raw materials and markets if cheap labor compensates for the added transport costs”
•Agglomeration. “Webber described the advantages afforded by like industries clustering […] When a substantial number of enterprises cluster in the same area […] the industries can assist each other through shared talents, services, and facilities […] Agglomeration can make a big-city location more attractive, potentially overcoming higher transportation or labor costs.”
Hotelling's law
is an observation in economics that in many markets it is rational for producers to make their products as similar as possible. This is also referred to as the principle of minimum differentiation as well as Hotelling's "linear city model". The observation was made by Harold Hotelling (1895–1973) in the article "Stability in Competition" in Economic Journal in 1929.
He stated that minimum differentiation could help stores divide the market. Under the assumption that is all products are alike, consumers will go to buy to the closest store.
Source:
http://ccl.northwestern.edu/netlogo/models/Hotelling%27sLaw
Lösch’s theory
focused on creating an ideal environment for consumers and maximizing consumer welfare, in that the need to travel to receive goods was minimized and profits were held level, rather than being inflated to earn extra. It consists of superimposed hexagons in a pattern around a capital or central city, the hexagons display the land around companies in order to determine at which location the population would have the lowest cost. Where hexagons intersected, smaller locations could be built in order to maximize the profit that each company received. A large cone emanates from any capital or large city, and where 2 cones meet, a boundary is formed where the population is divided.
Source:
http://prezi.com/ovgknb9ypxgx/loschs-model/
Jessica Ríos Mendoza