WEBER MODEL OFINDUSTRIAL LOCATION • Model used to predict the location of an industry. Keniesha Brown
AssumptionsNumerous, competitive, single-plant firmsTransportation costs: a linear function of distance Producers (firms) face no risk or uncertainty Infinite demand for a product at a given price Identical production technology everywhere (i.e., uniform per unit production costs)
ASSUMPTIONS • Raw material were not evenly distributed. • Ubiquitous Raw materials-those found everywhere • Localised Raw Material-gross and pure
WEBER LEAST COSTLOCATION THEORYWeber produced two types of locationaldiagrams:1. A straight line to show examples where one raw material is localised (pure or gross).2. A locational triangle to show when two localised raw materials were involved.
STRAIGHT LINE DIAGRAM One ubiquitous and one pure RM U U M LRM (pure) U Ubiquitous raw materialLR LRMM (pure) Least-cost locationM Market
STRAIGHT LINE DIAGRAM One ubiquitous and one gross RM U U U M LRM U (gross) U Ubiquitous raw materialLR LRMM (pure) Least-cost locationM Market
LRM (pure) Localised Raw Material Least-cost location M (pure) M MarketOne pureRM, one Mgross RM LCL will move towards the source of the gross LRM material if there is a (gross) heavy weight loss
Two Gross RMs LR LRM M (pure)LRM(gross) Least-cost location M Market M LRM
Isotims and Isodapanes 2 sets of isotim $30 assembly $25 cost + $20distribution cost Total transport cost Isodapane
Alfred Weber, 1909Labour costs: Isotims Labour costs as “distortion” to basic transport costs pattern Isotim Line of equal transport cost for any material, RM or FP “X” has cost of $3.
Case 7: Two Weight-losing raw materialsIsocost lines: concentric rings that connect equal-cost points (isotims) around RM1, RM2and MKT Weber called the isocost lines corresponding to each point location isotims
ISODAPANES We can find total transport cost for as many points as we want. And we can connect all the equal cost or equal value total transport cost points to produce what Weber termed isodapanes. In three dimensions, the graph of isodapanes would look like a bowl or depression in the space-cost surface. In two dimensions, it looks like a U. Clearly, the optimal location is in the trough of the depression.
Total transportation costs (TTC) are simply the sum of isotims at anypoint on the graphE.g., At X, TTC = 3 + 2 + 2 = 7
Alfred Weber, 1909Labour costs - Isodapanes Isodapane Line of total transport costs Determined by summing the value of all isotims at a point And joining all points of equal total transport costs
AGGLOMERATIONIndustrial location may be swayed by agglomerationeconomies. The savings which would be madeif, say, three firms were to locate together, are calculatedfor each plant. The isodapane with that value is drawnaround the three least-cost locations. If theseisodapanes overlap, it would be profitable for all three tolocate together in the area of overlap.
Alfred Weber, 1909Overlapping critical isodapanes Agglomeration economies