GEOG 597i
Critical Geospatial Thinking and Applications

Approaches to Industrial Location Theory

Over the years, geographers have taken numerous approaches as they sought to illuminate the various factors that influence the location of industries and businesses.

During this time, several identifiable approaches have come to the forefront. These rather distinct approaches to spatial analysis include least-cost theory and market-area analysis. Additionally, geographers have increasingly focused on the impacts of human behavior relative to the analysis of locational spatial patterns. 

Least Cost Theory

Von Thünen made the first efforts to identify the factors that account for the locations of industries. His ideas gave rise to the subsequent work of German geographers such as William Lanyard and Alfred Weber who were instrumental in the development of Least Cost Theory. 

Alfred Weber first major work on industrial location theory was published in 1909. Weber sought to create a “pure theory” of industrial location that could be applied to any system without regard for political or social orientation. Therefore, he eliminated any elements that were unique to capitalist or socialist systems, including the impacts of demand. He did this because he wanted to uncover the basic laws of industrial location, and he also wanted to understand the ways in which they operate. 

As Weber set about his work, he was intent upon creating a general theory that could be applied to all kinds of industries. His idea was to eliminate all complicating distractions by setting forth a set of basic assumptions. His final theory was deductive in nature in that it began with a set of fundamental basic premises.

Weber did not try to explain actual real-world locations, but instead concentrated on identifying those factors that influence all industrial-location patterns. He defined locational factors as forces that are the economic causes of locational decisions.

Weber stated that locational factors represent savings in costs that a business can gain from producing in one place over another. As he applied his theory, he took care to make sure that his comparisons involved only identical products. 

Weber classified locational factors in several ways. In the first place, he noted the difference between special and general factors. Special factors refer to the things that apply to a specific industry. For example, the perishability of a product may require unique shipping procedures (e.g., refrigeration). General factors on the other hand apply to all industries. These include the costs associated with transportation, rent, and labor. 

Weber also employed a classification system based upon local and regional factors. Local factors included the influences of agglomeration and deglomeration. As discussed above, like businesses normally gain an advantage when the cluster or agglomerate in a specific location. Deglomeration is the tendency of industries to disperse from a given location when the perceived advantages of agglomeration (demand) drove rents for the locations to levels that adversely impacted profits.

Check Your Understanding

Short Answer

Who is responsible for the development of least cost theory?

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Alfred Weber