470 Advanced Economic Geography

Industrial Location Theories

not on the impact of a singla
practice, enterprise locational decisions are based gle selectef
ofa number of considerations. Since each t
stnal factor but on the interplay and balance siting conditions, for secondary an
of industry has set of significant plant
as its own specific set
its or si nal determinants exists. Theorists
determinants exists. haveaattemp
1 neoIsts nave
as a whole a
to
to define its
complex of locational
truly bewildering
underlying structure
attempte MEDer

alaspor
Hoover, August Losch, Waltert.. Dndin
Economists like Weber, Tord Palender Edgar etc. formulated
Rawston, Allen Pred, Smith
and geographers like George Renner, 20th century. It must
be remembered, howeverO
theories of locatio. of industries in the
industrial ndscape at that time was very simple, with littde diversification, having narrow r Heber

industrial landsScape is rar more complex w

range and lesser role of political factors. Today's
an internationalization of production, enormous product range and groWing linkages.
with LAn
are
knowT

central aim of the theory of location is to find

the 'optimal location'- the economid
best location, the one that gives maximum profits. Highest profits are obtained when thenicaly
The 2 Manut

cm know
are minimum and the revenue are maximum. However, rarely it happens that these situatine
linputs

are found at the same time or same place. Therefore, location theories are divided intoti
4 Labou
maximum revenue location theories.
groups: () least cost location theories, and (tü)
The real manufacturing landscape, as it exists today, displays a variety of situations someni as
which have represented ideal locations at one time but not necessarily now. There are instances and tr
move
where enterpreneurs have chosen locations based on family ties, amenities, satisfyingbehaviou
etc. rather than pure economic principles. Thus, the following approaches to industrial locaion lastCe
theory can be enumerated: ACCOL

I. Optimiser behaviour: () Least cost approach Atenal,

(i) maximum revenue approach or
market area approach, or tansporti
location inter dependence approach. iued, pur
etors ar
II. Satisfier behaviour: () Behavioural approach
Webe
(i) Structural approach nngs o
Least cost theory has been preselted by Alfred Weber and includes some of theW
Tord Palander and Edgar Hoover. The Maximum revenue/market area/loca
interdependence approach includes some of Palander and Hoover, Losehaandt
much of Losch
Over, much 9ods be
work of economists interested in the theory of imperfect or monopolistic competitioni
(Fetter
arge sca
1937, Sm prod
1924, Hotelling 1928, Robinson 1934, Chamberlin 1936, Lerner and Singer
1941, and Ackley 1942.) Dega
Least Cost Approach east
The least cost approach emphasizes the search for the least cost locations wherethe dem
factor is held constant. It assumes perfect competition, with no monopolistic
polistic advan
advantage

respect to the market arising from specific locations. and

Weber's Theory ortant
t he
Arda
Weber's Theory of the Location of Industries', proposed in 1909, is the most imp a2 18
based on least costs. Anumber of other Germans, including Withelm Launhardtu
 Manufacturing: Location 471

could be
had Iready written
already
on the subject. show how the optimum location
He attempted to
by the
in a simple situation with two sources of raw material and a market represented
of market area. The
fours ofaa triangle and also developed an approach based on the concept
corners of
cornarionof Weber's book in in 1929 gave it a much wider recognition. His approacn 1s
English
t r a n s l a t i o n

deterministic and normative.

determinis

Weber aims to explain the location of industrial activity in terms of three economic factors:
costs, (
ransport costs, ) labour costs, and (ii) agglomeration economies. His explanation is based
(iü)
(i)transport cost point for production.
upon
finding the least
Assumptions

Weber made five controlling assumptions:

This is
1. An area
is completely unitorm physically, politically, culturally, and technologically.
or 'isotropic plain' assumption.
known as the uniform
is
involves a single product to be shipped to a single market whose location
2. Manufacturing
known.
materials from more than one known source location.
3. Inputs involve
raw

4. Labour isinfinitely available but immobile in location.

5. Transportation routes are
not
fixed but connect origin and destination by the shortest path;
i nd the distance they are
and transport costs directly reflect the weight of items shipped
moved.
Least Cost Location Principles
the cost of raw
According to Weber three regional factors affect the costs production: (i)
of
labour.
material, (iü) the cost of transport, and (iii) the cost of
while the cost c
The cost of raw materials varies according to the nature of the deposits,
raw materials depend upon the nature of raw materials
whether it is ubiqu ous,
transporting
fixed, pure, or gross. All these variations are reflected in the cost of transportation so that regional
factors affecting production are reduced to transport cost and labour cost.
Weber identified another factor called agglomeration. Agglomeration economies refer to
Savings of the individual plants that result from their operating in the same location. This might

result from the common use of such activities as auxiliary industries, financial services, public
utlities et. As more and more firms cluster, linkages increase and there is an increased flow of
purchasing of materials and
80Ods between plants, specialised labour and savings due to bulk fim increases
can be attained when a
eITS scale marketing of products. Agglomeration economies
production or when many firms cluster together.
Deglomeration economies, by contrast, include the increase in cost of land due to clustering.

Least Transport Cost Point

10 find this point, Weber first sought the least transport cost location which he considered
the There are two raw materials,
Ost important influence, using a locational triangle: (Fig. 20.1)
C. The least transport cost point, G is the point at which
th d , and one consumption point,and finished products is least. These transport costs are
Otal cost of moving raw materials
ated by multiplying the weight of material or product by the distance carried, resulting in
Deing exerted on the production point by each the corners the
of
w o tonnes of material M1, and two tonnes of material M2, are needed to produce one tonne
of
In Fig. 20.1
triangle.
or finished product. In a weight losing manufacturing process such as iron smelting, the least
 Advanced Economic Geography
472
472
20.1 (b) one to
material. In Fig. tonne
n e a r to the
of the r a w
or finished ed pro
produt
to produce two tonnes is
sources

cost location is needed

transport material M2 are location
1 o c a t i o n is attractive
attractive.
o n e t o n n e of
market-oriented
m a t e r i a l M1 and a
as baking,
industry, such
and in a weight gaining

tonne 71 tonne
~

2 tonne 3 tonne

M
M2
M2
M (a) Weight gaining industry
industry
(a) Weight losing
Weber's locational
triangle
20.1:
Fig.
Effect of Labour since he considered that industrie
of labour costs on location,
the effects of least labour costsi
Weber next examined least transport costs to the point
from the point of costs i n v o l v e d in such
a move
would be located away a d d i t i o n a l transport
than any
labour costs w e r e greater have been drawna
saving is in
cost point, and around this point
In Fig. 20.2, P is the
least transport cost per unit of production
lines of equal transport
of equal cost), or
unit of produtIO.
series of isodapanes (lines would reduce costs by 15p per
and L2 which Pn
labour at Ll to relocate from
from P There is cheap worth while for a manufacturer
or not it would be isodopane wouc
The question is whether location within the 15p transport
order to take advantage of
it. Clearly, any would be more
extra transport and therefore Ll
labour than would be spent
on
location becaue
save m o r e on
labour costs increasing in importance in
Weber saw
profitable position than P the efficiency of transport,
thus increasing the as
technical developments were increasing to other costs.
whiie labour cost were rising relative
berween the transport isodopanes,

20P 15P 10P Critical Isodapane

P where increased transport
on
costsbalance savings
labour costs

M M2/

cost location
Fig. 20.2: Effect of lobour
and treinsport on
 dect of Agglomeration
Manufacturing: Location 473

Havin combined the eftects of

transport
Hadustry's
eftectof industryy's tendency to
agglomerate.
and
labour costs, Weber
ectems located
b utth e firms there
could
In Fig.
cut out their 20.3, A, B, C, D, and E arethirdly examined the
least cost
t
tnhree of them operated in the same production costs by £ 1 per unit locations,
at location. However, they must of production, it
etcOsts of over £ 1 per unit ot production.
ranspon round each produce and it is
beendra
In Fig. 20.3 the
critical
not incur increased

C, D, and E could isodapane

clear that firms of £ 1 has
locating in the shaded area.
reduce their costs by

Critical Isodapanes'
M2
M1

M2 A
M
M1 M1 M2

M2
Area of agglomeration
Fig. 20.3: Effect of Agglomeration on location

Criticism
Weber's theory identifies certain basic influences on industrial location.
Yet, it is open to
criticism partly because of certain inherent weaknesses and partly because circumstances have
changed since the turn of the twentieth century when Weber published it.
1. Many of the assumptions made by Weber are quite unrealistic e.g-
(a) Transport costs do not rise proportionately with distance and weight. Long hauls
cost less per unit of weight than short hauls do.
(6) Perfect competition rarely exists
C) Man does not always behave rationally.
(d) The market is in the form of points and one plant serves only one market.
2.
Weber's material index was too crude a measure of transport cost which does not rise
proportionately with distance and weight. Moreover, transport costs are rarely a basic
Criteria for the location of a firm today. Technological improvements have already reduced
ransport costs. Besides, changes in other things such as the manufacturing process,
international organisation and external links make up the total costs. Labour, particularly
is now the most important industrial location
oT high value and high tech products,
determinant.
the revenue
3 weber concentrated too much on minimising costs. He failed to identify
affects the profitability of a firm. Therefore,
aspect of a firm's operation which also directly
ne theory gives an unbalanced approach.
 474
474 Advanced Economic Geography
the conditions
in the modern ind.
4. Webers agglomeration analysis is
inconsistent with
Justia
world.
of the secondary
influences e.g. political, s
many
5. Weber did not take into accoun industrial location
effect on
numan, which have an important rate structure
complexities which las
is accentuated by freight materials are often
. Market orientation finished product.
As a result,
raw
m u s t be moved Ve
higher cost of transporting that finished goods
distance
reduce the one factor
nearer to the market to the single product,
organisation-as
industrial this condition ate
.Increased complexity of corporation. In
international
than it was in thor
firm is replaced by multi-product,
Manufacturing is
more complex
items and componentea
theory is difficult to apply. with semi-finished
twentieth century. Many plants
begin a m o u n t s of weight, Thee
Producer's
lose large
goods seldomorientation. ight, Therefore
than with raw materials. material
tendencies toward
there are not many

Market Area Approach identical production costs and cell.

that all firms have
This approach generally assumes each seller seeks to control the largest n
spatially distributed
market. In choosing his location,
be intluenced by consumer behaviourand
possible
and extent of which will
market area, the position location and market area is th
firms. The spatial pattern of plant thus, a
locational decisions of other of fimms
in demand of locational interdependence
product of variations from place to place
Tofd Palander's Theory
A Swedish economist, Tord Palander published
his industrial location theory in 1935,
fundamental questions in attempting to develop a theoretical approach
distinguished rwo
industrial location.
where will the production take
1. Given the price and location of materials and of the market,
place?
2. Given the place of production, the competitive conditions, factory costs, and transportatioa
how does price affect the extent of the area in which the producer can sell his goods

P (price) Gradients of
delivered
price

Freight
costs

Price
at
B
plant

A B

d (distance)
Market of A Market ofB
Fig. 20.4: The markei area of A and B
 Firsthee dealt with the
market areas. To
Manufacturing: Location 475
Phe takes the simple case of two
firms determine the boundary
making the same product forbetween
areas,

are two plants A and

20.4 thereare the two
marke
-

B
serving a
-

the diagram.
market distributed linear a linear market. In
market. axisigorin Fig.
The plant cost the price
or along the horizontal
firm. and BB' for firm 'B. Ffirm
charged
B's
for the
product source is the vertical distance AA for
at
cost is
increases as the cost of lower. Away from
transportation increases. the
has to pa
the lines rising in both direction plant, the price the
The consumer
show fixed plant cost and a variable from A and B'. Thus, at rising
includes transportation cost
15
cost any point
of the price chargea
market
areas of t two
be
firms will be at X. Here transportation.
the delivered The boundary between the
consumers will
indifferent as to which
firm they buy prices from both
producers is equal
aalander illustrates number of variations
a
on the
from.
ofhe plant
price (P) and freight situation by changing the
charges
) The two firms have equal plant () (Fig. 20.5). relative values
(a) price and the same
so the market area
boundary is midway between Afreight
and B,
costs per unit of
distance and
(h) There are equal freight rates but lower
more area than A. plant price at one location (B). Which
controls
(c)B has a higher plant and transport
cost
area by virtue of the higher delivered than A,
but is still able to control a
small market
price from A near B.
(d)Where one firm has lower plant price but higher transport costs than the
to control an extensive section of the market but other, it is able
there is an area near A where B
regains control by virtue of its lower cost. freight
(e) Here the situation is the same as d, except that firm B cannot serve the market
immediately joining its factory because the price at the point is high. It is only at some
distance away from A that the relative low
a lower price than A.
freight rate from B allows the firm to sell at
The above situations can be seen in a three dimensional
manner.
In three dimension, the market area
the delivered prices from the
boundary (or isotante) becomes a focus of points where
producers equal, and the gradients of delivered prices from an
are
inverted conical surface with an apex directly above the
point representing the factory. Certain
generalisations can be made concerning the form of market area boundary in different circumstances:
(a) If for the two firms, both plant price and transport rates are equal, the boundary will be

a ine perpendicular to the line joining the firms and midway berween them.
() lf prices are equal but costs of delivery vary, the isotante will be a circle round the
factory with the higher freight rate.
C) If only transport rates are equal, the isotante will be a hyperbola, concave towards the
factory with the highest price.
The size of the market area that a firm controls will influence the profit that it makes. With
the
e cost of production and profit per unit of output given, and sales related in volumetothe size
market function of distance from the plant which a firm
Can
Can extend its
area and total profits become a
market.
Edgar Hoover's Theory
leather industries and in 1948 gave
gar Hoover (1937) publisheda study ofthe shoe and
 B

A AP= BP
A =B
(a)
A
d
B
A

P B AP> BP
Af>B
(b)
AP BP
B d
A

A
BP A<BP
(c) A'<B
AP

A d

Bf
AP <BP
(d) A> B
BP
AP
A B d

(e) N AP = BP
BP Af = B
A
A B

Fig. 20.5: Tord Palander's analysis of industrial location

his first theoretical statement in his book 'The location ation
of Economic Activity'. His work L0
Theory and the Shoe and Leather Industries' contains both a theoretical statement and two
case studies.
His main aim was to investigate the area served each
by producing point (point of prouu
extraction).
 Manufacturing: Location 477

ASSumptions
Hoover assumed that:
ect
There is perfec competition between producers or sellers
1. at any one location.
2. There is perfect mobility of factors of production.
T h e transport costs and production or extraction costs are the determinants of location.
Buye are 'economic men', i.e. they obtain the commodity from the source that offers the
4 lowest delivered price.

Transport vary with distance.

costS
5.
Hoover's theory is based on delivered prices. The delivered prices to any buyer will be the
af production/extraction plus transport cost, This is represented by isotims lines joining
ost o f p r o d u c t i
delivered price.
es of equal
considers extractive price first, the locations of the deposits are given and
Hoover
Hoover c o n s i d e r
where
npnfs
t s to
find the area that each producing point will serve. There is a given point where
raction takes place. If *he cost of extraction does not vary with output, thereturns transport costs are
to scale.
only
the
variable affecting price. But it will be also affected by diminishing
that extractive industries characteristically operate in a situation where average
Hoover argues
cost rises with
increased production as the market area gets larger. This effect is shown in Fig.
20.6.

Margin lines
(delivered price cost
of production + cost of
Cost transportation)
of Boundary of
market areas
price

Y
A B C
X
under
of two producers
between the market
areas

ig. 20.6: The boundary returns

conditions of diminishing
market area is one
and A, B, C indicate possible limits to its
O,
Amineral is extracted at pointarea costs are indicated by Oa and the
dire lf supply is made to the
OA, then the production
transport costs
are added. This
O as
increases away fromisotim is extended to B,
Shows how delivered price isotim map. If the
tr2 section through
an
Similar effects
a cross is i n t r o d u c e d .
thPort gradient is simply and a new transport
gradient (bb)
at all other possible
of extraction rises to b, with the delivered price
ArSt a', b, c'
W i t h extension to C, joining points
 478 Advanced Economic Geography

limits of the market area produces what Hoover termed the margin line. Another
as
mineral i
tound at P Theintroduction of margin line relating to this mineral at P leads to an intersection
which represents the boundary between the rwo market areas. At the intersection, delivered
price is the same for O and A: elsewhere one source offers the product at a lower price than the
other.
This analysis can also be applied to formation of marketfor a manufactured product
areas
In most
manufacturing industries, the cost of production decreases with rising output. Thus, the
margin line will fall with increasing distance from the production point. This is because outw
rises as the market area is enlarged to create economies of scale. When the point of diminishin
returns is eventually reached, the margin line will turn upwards. The slope of the margin line hac
8reat implications for plant location. This can be analyzed with respect to two situations:
1. When the margin line rises steeply away from the point of extraction, it will encourage
other producers to set up plants in intermediate location to serve areas with relativel
high delivered price.
2. When delivered price differs little with distance from the point of production, a small
number of producers will tend to supply large market areas.

Isotims
(equal delivered price)

Market
area
boundaries
3 4 5 6 7 8

Fig. 20.7: Isotims around three points production

Hoover followed Weber closely in manufacturing. He pointed out that in the absence or
production cost differences, the best location will be at the point of minimum transport costs
 Manufacturing: Location 479
he
be near the source
nea
of raw
may

cost material, market or at an intermediate

which
transport point found by drawing isotims around
is point
cOstis
point. The least
pss of equal total transport cOsts given material and market
market points
points from
from
whichl i n e ,
(ísodapanes)
icnr also showed how different sections of the can be drawn.

HOfter that Palander also considered. This ismarket will be served by different producing
ointsrs of production (A, B, C), each having a illustrated in the Fig. 20.7 where there are
hree different cost. Isotrims drawn
andthePndaries of their
respective market areas are at the delivered around them
ror considered the role of transport costs. price watersheds.
Hor

rate minimum point not at

of a separa Considering uniform transport costs the
ity one
of the triangle is much less. It is more
possiat material source or the market will havecorner
Iikelythat.
a
pull exceeding that of the other corners,
een
andwhen it considered that transter costs are actually
it is consid
less than proportional to distance,
3heof location not at one corner is even less likely. addition, loading costs and other
In the
haalchargesoperate against least cost location within the triangle. In practice, the influence
erfer costs tends to locate production units at markets, at sources
oftransfer cos
of materials or at junction
hreak point in the transport network.
Hoover further considers the etfect of transportation, demonstrating the influence of convex
gradients and trans-shipment points.
Hoover's theory is cntiCised because:
1, He viewed only transport orientation, and did not integrate other causal factors in this
theory
2. Despite his references to market areas, he was much more concerned with cost than with
the demand factor.
August Losch's Theory
August Losch (1940), a noted economist, developed a general theory of location with the
major emphasis on demand. He sought to draw attention to the marketing factor and the idea of
maximum profits related to sales revenue.
Losch sought to explain the size and shape of market areas within which a location would
Command the largest revenue.
Volume
o Sales =

of cone

Price

P Distance
N Market area
o Quantity boundary
production point Demand curve rotated
around
OP price at production point
production point to give
cone
AQN demand curve
quantity sold.at P AQP
PQ
A no demand because price too high
ig.20.8: The theoretical shape of the market area
 480 Advanced Economic Geography

Assumptdons
Losch assumed:
1. An isoropic surface.
2. Constant supply of goods/servioes.
is the result
Population is evenly
distributed.
the price
increase
of
3. in price. If from a
prod.n
4. Demand
decreases withan
increase
demand would
decrease with distance

circular (Fig.
ductic
2
market are a
i n c r e a s e in transport
costs,
demand c u r v e
would be cone-shaped
and the
profit maximization.
20.8)
centre, the their main aim being
economic men,
5. Enterpreneurs act
as

Statement them is equi-distant from the

located on the plane. Each of on the numh
.

other
There are many producers market arèa is dependent
circular. The size of the area becomes sm
and their market areas
are the market
increase in number,
and smaller, and profits are
As competed
producers away Many circular areas leave some places unser
Finally,
entrepreneurs/producers.
served
closer. Thus, hexagons develop
(Fig. 20.9). Final
move
between circles and the producers develops.
with producers, a mesh of hexagons
when the plane is packed

3.
1. 2
Firms operate Competitior To avoid ove 'p Final pattern
with circular increases to of circles and to of market
market,areas, sarve all the servs all areas, areas.
potential market. market areas
become hexagonal.

Fig. 20.9: Market areas become hexagons

Each product will represent a different sized market area, i.e., the size of the hexagons varies.
Losch sought to find a spatial structure that would be efficient for both the producer and the
onsumer. This as done by identifying a point, which could be the centre for each of the 1
different hexagonal market areas. To identify it, Losch
from the entire set of arbitrarily chose just one production cenae
production points established on the
(hexagons) so that this one centre was common to them all. Heplanes.
He then arranged he
the central point and brought them to rest then rotated the hexagons arou
where the maximum number of
forming points of maximum demand which should hexagons coincide,
develop concentrations of industry.
as
Criticism
1. Losch's theory is abstract in
nature.
2. It has failed to take into
account the problems arising from locational interdepenuc
of plants.
 Manufacturing: Location 481
3. It
over-emphasizes demand.
3.rkets for products do not
ar occur in
isolation
4 ween firm and its
a
market, therefore, rarely they overlap. Location
as

because a s more firms appear, profits are

using the
occurs,
eroded and optimalprofit maximingequilibrium
philosopny
change locational ciro
ircumstances
LOsch's calculation of market demand was too crude and
ac enterpreneurs would encounter in ignored many of the difficulties
locational decision. trying to estimate demand as the basis for their

sever,
However the market-oriented approach does have
such
a s brewing,
rurniture assembly, etc.
some validity for consumer industries
Jhe locatioon theories
The location t so far discussed
have been based on the
men' totally rational andassumption
were being taken by that the location
decisions w e r e

However, such a
'economic
decer such creature does not exist and location decisions having perfect knowledge.
ability and less than perfect knowledge. are taken by men with limited
evertheless, such men choose locations where total costs are lower than total
$ome profit can be made. Locanons where some revenue, so
bat
thats profit can be made are much
more extensive
noints of maximum profit. The search is now to find the
nftable activity can take place and then to explain deviationsmargins limits, within whichhor
p from the optimum location.
Spatial Margins to Profitability: Smith's Theory
D.M. Smith (1941) introduced a simple model of industrial location based on his
studies
of steel mill in Itabirits, Brazil. The theory introduces the idea of
spatial margins locations outside
of which would result in the firm making a loss. Inside the margins, the extent of
is based on the difference between costs, and revenue would vary
profit making
according to the location
chosen. This could be explained with the help of three figures where cost and
price are plotted
on the vertical axis, and distance along the horizontal axis.
In Fig. 20.10 demand is held constant so that the
price obtained is equal at all points but
cost per unit of production increases with the distance
from point O, resulting in the V-shaped
cost curve. In this case, O is the least cost location which
Mb
gives the maximum profits and Ma and
are the margins of profitability.
Cost
Loss Profit

Price

Ma O Mb
Distance
"20.10: Spatial margins to profitability. Demand held constant
 482 Advanced Economic Geography

held constant but demand varies, the therefore, price

ucer thattheprod
In Fig. 20.ll costs are
distance from point O. This leads to an inverted V-shaped
sp shaped
can get varies declining with m a x i m u m profits an

revenue curve. In this case, O is the

maximum revenue location giving and Ma
- Mb are the margins of profitability.

Loss Profit
Cost

Price

Ma O M
Distance

to profitability. Costs held constant

Fig. 20.11: Spatial margins

effect isillustratei
both costs and demand vary from place to place. This composite
In reality, and r e v e n u e decreases from point B. In thit
20.11 in which costs increase from point A
in Fig. that it is not the point of highect
maximum profit location is at A, despite the fact
case, the be made any where. The extent of these
revenues. Within Ma
and Mb, a profitable location can
differences in costs and
is affected by the steepness of the curves, reflecting spatial
margins over a wide area or it must be
and these decide whether an industry can be dispersed
revenues, maximum profit and al
concentrated. In theory, only one firm can be located at the point of
locations. However, firms having suboptimal locations
other firms must therefore have suboptimal
can also make profits and run successfully.

Criticism
1. Costs and revenues for a firm are rarely linear.

Profit
Cost
-Loss

Price

B A

Ma M
Ce
Distance
er
Fig. 20.12: The maximum profit location (-after DM. Smith)
 Manufacturing: Location 483
c h more likely that market
much

2. Itis demand factors

taste and preference variations.
income, tast are not uniform with distance, due to
The impact of
posure
urther complicates demand factors. advertising and mass media
.atel1ing's Theorv
 o f the Least acturing: Location 485
Cost and
Appraisa

prOn the basis

hasis of a
comparison Market Area
between
ollowAll theconclusions hypothetical andApproaches
following
can be drawn:
1. A theories
thec are valid to actual industrial
ries and
ndustries and particular
in particu
a
limited extent, and each has situations, the
heavy manufacturing firms
countries. Thus, Weber's its
ountries. On the e using a small
other hand, Losch's theory seemsstrength
number of raw be more
to amongparticular
material accurate with
service
industries in less theory supplies in developed
developed countries.seems to be moi e applicable
Al the
2. All theories can
the theories can be
be us
usefully modified and to
consumer and
world phenomena. adopted in order to
All attempts to
formulate spatial improve their value in real
oir own hypothetical limitations.
models for an
industrial
As
the validity of hypothesis decreases. reality grown further environment are restricted by
away from theoretical
Theories and models often tend to perfection,
r ignore the constant
example, Weber's theory was more
than it is now. Losch's theory was accurate at thechanges taking place in the location.
more true in beginning
1950's then
of the twentieth
Two geographers are
likely to give two
it
different theories
is century
today.
situation because their observing similar
proliferation of theories ofperception towards the
industrial location. M. world will be different. Thisgeographical
attempted to combine the approaches of Weber Greenhut and Walter Isard, forhas led to
and Losch. example,
Behávioural Approach: Allen Pred's
The least cost and market area Theory
theories are
and it uses the profit maximizing theories which assume that
all firms seek optimal locations
decision making. Behavioural concept of rational, economic man as a
approach, in contrast, stresses
optimal. People act individually, trying to achieve that real world
basis for
Unlike economic man, real the best decision in decisions are rarely

decisions must reflect these

man lacks
perfect knowledge and ability, and, particular circumstances.
where maximum concerns. The real man does not act therefore, his locational
profits could be obtained, he is rationally. Even if he knew
location. More unlikely to choose an
probably he is likely to choose the location which
effort. In fact, he is a economically
gives sufficient profit optimal
at least
satisfier. A businessman is
atner than prepared to accept a
Share of the economically Many industrialists place moresatisfactory
the best location. location
market than on maximum
profits and would be
emphasis their
on
Profits which are merely higher then those of their therefore, quite happy to achieve
3ome profits in order to competitors. may even prefer to forgo
He
e the coast, or near his locate in a place that is especially amenable in a pleasant climate, at
-

favourite city.
he behavioural approach draws on human being as a
'Behaviour and Location', in 1967, in which satisfier.
Allen Pred published his
entitled
uustrate an analysis of he devised a behavioural matrix to
locational decisions.
the
the aSuggested that effectiveness in decision making is related to information available and
ability to use
matrixt y
iit. These factors are closely connected to human nature and form the
axes of his
described as an environment. 20.14)
T matrix offers aoperational
ah:e
(Fig.
bivariate graph. The quality and quantity of information changes. The
Bct y to use
use increased feed back may also improve. So, axes of the matrix are described as
vectors (forces with
Uorces
changing magnitudes) rather than variables (distinct measurable properties).
486 Advanced Economic Geography

can be analysed. In Fig. 20.14 the

ne spatial
locations within the spatial margins
Using this matrix showing two optimal
locations.

margins of an industry have been mapped,

(a) BEHAVIOURAL MATRIX
Ability to use information
5 Factories
3
optimal locations
s p a t i a l margins
to profitability

(b) MAP OF
FACTIRIES

20.14: The behavioural matrix of Allen Pred

Fig.
Criticismn
as mechanical.
1. Responses to changes in information are portrayed
both are interlinked, though not
2. In reality information and its use cannot be separated,
as cause and effect.
3. Motivation as a factor affecting locational decisions is ignored.
4. Political and social environment in which decisions are taken has also been ignored.
55. Quantification of human behaviour is difficult.
Structural Approach
The structural approach to manufacturing locations attempts to explain thebehaviourusing
a historical, political perspective. This approach looks at the political economy ofeconomi
development in its broader context, encompassing regional development processes, urbanizato
and technological innovation. It often follows a Marxist orientation with its emphasis on locauo
as a consequence of historical and structural conditions governing the capital utilization of cap
allocation or investment over space by firms.