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Weber ’ s model on industrial location. Natural resources Markets Labour Transport costs. Unevenly distributed (ubiquitous/localized) Fixed On a plain Fixed Immobile unlimited supply At given wage rate Weight + distance of transport. Explicit assumptions. Implicit assumptions.
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Natural resources Markets Labour Transport costs Unevenly distributed (ubiquitous/localized) Fixed On a plain Fixed Immobile unlimited supply At given wage rate Weight + distance of transport Explicit assumptions
Implicit assumptions • Uniform surface • Fixed capital • Perfect competition • Economic men
Cost factors affecting industrial locations • Transport costs • Labour costs • Cost of proximity (agglomeration/deglomeration)
Material Index total weight of localized raw materials used =--------------------------------- weight of finished products
Labour factor • the LTCL may not coincide with the cheapest labour site • especially significant for attractive labour-intensive industries • If the saving in labour cost is greater than the increase in transport cost, he will move to the cheap labour cost site
Labour factor • Critical isodapane = transport cost at LTCL + labour cost savings at source of cheap labour • If the source of cheap labour is inside the critical isodapane, the location is a profitable one (and vice versa).