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Weber’s Least-Cost Theory

Weber’s Least-Cost Theory. One of his core assumption is that firms will chose a location in view to minimize their costs. The Basics.

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Weber’s Least-Cost Theory

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  1. Weber’s Least-Cost Theory One of his core assumption is that firms will chose a location in view to minimize their costs.

  2. The Basics • Alfred Weber formulated a theory of industrial location in which an industry is located where the transportation costs of raw materials and final product is a minimum.

  3. In one the weight of the final product is less than the weight of the raw material going into making the product. This is the weight losing or BULK-REDUCING industry. Ex: Copper production steel production

  4. BULK-GAINING • In the other the final product is heavier than the raw material that require transport. • Usually this is a case of a raw material such as water being incorporated into the product. • This is called the weight-gaining or BULK – GAINING industries.

  5. Brick- Bunny • What happens when a variety of materials is needed for the production? • Production point moves closer to the heaviest raw material to balance transportation costs.

  6. ENERGY SOURCE?? • The availability of an energy supply is another factor in the location of industry, but the factor used to be much more important than it is today. • The early British textile mills were site-tied” because they depended on falling water to drive the looms. • Today, power comes from different sources and can be transmitted or transported over long distances. • Exceptions occur when an industry needs very large amounts of energy, for example, certain metallurgical and chemical industries.

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