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Weber ’ s model on industrial location

Understand Weber’s industrial location theory considering natural resources, markets, labor, and transport costs. Explore factors affecting location decisions, like labor costs and transport expenses. Analyze the critical isodapane for optimal site selection based on labor and transport savings.

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Weber ’ s model on industrial location

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  1. Weber’s model on industrial location

  2. 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

  3. Implicit assumptions • Uniform surface • Fixed capital • Perfect competition • Economic men

  4. Cost factors affecting industrial locations • Transport costs • Labour costs • Cost of proximity (agglomeration/deglomeration)

  5. Varignon frame

  6. Material Index total weight of localized raw materials used =--------------------------------- weight of finished products

  7. Line graphs

  8. Location triangle

  9. Isodapane

  10. Labour factor

  11. 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

  12. 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).

  13. Critical isodapane

  14. Agglomeration factor

  15. Further exercise

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