LOCATION THEORY: THE
FOUNDATION OF PLANNING
Postulated that around a central town
● Rural land of constant fertility assumed
different forms.
(the type of land use varies with distance
away from the market)
● Land use diminishing intensively in
reverse relationship to increased distance
from the town.
(The intensity of production declines with
distance away from the market)
Land in greatest demand would be as near as
possible to the market on account of low
transport costs.
●the highest rent would be gained for this
advantage and the highest value output per
hectare would accrue.
Outer belt would have little demand for land
because of transport costs.
● Rent would be low and the value of
extensive production would be
correspondingly low.
Modifications…
● overall use pattern might be modified by
the existence of a navigable river.
● Cost of river transport are low especially
for bulky commodities compared to fairly
high transport cost overland.
● River would have the effect of extending
the different land uses almost parallel along
its course.
● Further modification might occur if a small
city with its own production zones is located
within the land use pattern of the main
settlements.
Von Thunen
●Model assumed unlikely conditions such
as production taking place around an
isolated market place and soil being of
constant fertility. However, it established a
distance-cost relationship which recently
became the basis of urban location theory.
●As price mechanism largely decides the
profitability or utility of goods and services,
it subsequently determines the location of
activity and the spatial structure of the
urban area supplying these goods and
services
William Alonso
●Rents diminish outward from the center of a
city to offset both lower revenue and higher
operating costs and not least transport costs.
●A rent gradient would compensate for falling
revenue and higher operating costs.
●Different land uses would have different rent
gradients, the use with the highest gradient
prevailing.
A. COST
●Price and rent of land fall with increased
distance from the CBD
wages are higher in the center
●Commuting costs need to be offset by
higher remuneration. (transport cost more
of a reflection of accessibility than distance)
●Locations close to junctions, nodes and
terminals are particularly favored
maximizing proximity to suppliers and
markets.
●Decentralized shopping centers are being
developed following road improvement and
increased car ownership.
● Modern manufacturing industry relies
increasingly on heavy road vehicles for long
distance transportation and incurs lower
transport costs on the fringes of cities than
at more central locations.
B. REVENUE
● retailing revenue is determined by the
size of the shopping catchment area or
hinterland, not just in terms of population
but in terms of purchasing power.
●distribution of the day-time population and
points of maximum transit (where people
cluster together) are also important.
●In the case of offices, the spatial
distribution, number and size of client
establishments determine revenue.
● Revenue is thus greatest within the CBD
and so are the aggregate costs.
…as distance from the center increases,
revenue falls and aggregate costs (after
falling initially) rises.
…this is due to the upward pull of transport
costs, which are no longer offset sufficiently
by economies in the use of land and labor.
…only within a fairly short distance from the
CBD are commercial users able to realize
high profitability.
C. PROFITABILITY
●To maximize profits, firms need to locate
where they can benefit from both the
greatest revenue and from the lowest costs.
●Specialized functions and activities serving
the urban market as a whole will locate
centrally.
●Firms requiring large sites and those
attempting to reduce costs of over-
concentration will be attracted to the
suburbs.
●Firms locating close together to benefit
from complementary will incur lower costs
because of external economies and enjoy
higher revenue due to joint demand.
…Since there is a high degree of inertia,
most firms find it difficult to adjust their
locations to the optimum.
…A satisfactory rather than ideal location
moreover is established by zoning and land
use controls.
A mixture of interacting influences usually
explain each locational decision.
.....As price mechanism largely decides the
profitability or utility of goods and services,
it subsequently determines the location of
activity and the spatial structure of the
urban area supplying these goods and
services
.....High levels of accessibility within the
CBD are reflected in low transport cost
attracting greatest demand for commercial
sites
.....Conversely, low over-all accessibility and
high transport cost outside urban areas will
attract a much lower level of demand.
.....other possible influences: changes in
population, technology and transportation,
pressures from redeveloped central areas
and local and central government policy.
D. LOCATION
A factor which, as propagated by the adage
“location, location, location” is considered to
be the foremost determinant in the
catalyzing of the decision to purchase.
True in the practice of conventional
suburban development
Downside being that a preexistence of
excellence in location is
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invariably associated with high cost of land
acquisition

Created by proximity to a desirable factor

such as transportation, a waterfront, a
slope, a long vista, a pleasant climate, a
popular resort, or a desirable community

Only method to economically achieve the

value added by location is to create it on
inexpensive land through Planned
Neighborhood Development.