Alfred Weber (1868-1958) formulated a theory of industrial location in which an industry is located where it can minimize its costs, and therefore maximize its profits. Weber’s least cost theory accounted for the location of a manufacturing plant in terms of the owner’s desire to minimize
THREE categories of cost:
1) Transportation: the site chosen must entail the lowest possible cost of A) moving raw materials to the factory, and B) finished products to the market. This, according to Weber, is the most important.
2) Labor: higher labor costs reduce profits, so a factory might do better farther from raw materials and markets if cheap labor is available (e.g. China – today)
3) Agglomeration: when a large number of enterprises cluster (agglomerate) in the same area (e.g. city), they can provide assistance to each other through shared talents, services, and facilities (e.g. manufacturing plants need office furnitur
THREE categories of cost:
1) Transportation: the site chosen must entail the lowest possible cost of A) moving raw materials to the factory, and B) finished products to the market. This, according to Weber, is the most important.
2) Labor: higher labor costs reduce profits, so a factory might do better farther from raw materials and markets if cheap labor is available (e.g. China – today)
3) Agglomeration: when a large number of enterprises cluster (agglomerate) in the same area (e.g. city), they can provide assistance to each other through shared talents, services, and facilities (e.g. manufacturing plants need office furnitur