Abstract
This paper presents a cost-minimizing location model to investigate the theoretical impacts and implication of factor-price uncertainty on the optimum location decisions of the firm in linear space. It will be shown that increased input price uncertainty leads the firm to move its factory towards the site of the price uncertain input.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Alchian, A. A., Information Costs, Pricing and Resources Unemployment,”Western Economic Journal 7 (1969), 109–128.
Batra, R. N. and A. Ullah, “Competitive Firm and The Theory of Input Demand Under Price Uncertainty,”Journal of Political Economy (1974), 537–548.
Bradfield, M., “A Note on Location and the Theory of Production,”Journal of Regional Science 11 (1971), 263–266.
Emerson, D. T., “Optimum Firm Location and the Theory of Production,”Journal of Regional Science 13 (1973), 335–345.
Greenhut, M. L.,A Theory of the Firm in Economic Space (2nd Printing), 1974 (Lonestar Publishing Co., Austin, Texas).
Isard, W.,Location and Space Economy, 1956 (M.I.T. Press, and Wiley, New York.
Khalili, A., V. K. Mathur and D. Bodenhorn, “Location and the theory of Production: A Generalization,”Journal of Economic Theory 9 (1974), 467–475.
Leland, H. E., “Theory of the Firm Facing Uncertainty Demand,”American Economic Review 62 (1972), 279–291.
Mathur, V. K., “Some Unresolved Issues in the Location Theory of the Firm,”Journal of Urban Economics 6 (1979), 299–318.
Miller, S. M. and D. M. Jensen, “Location and the Theory of Production: A Review, Summary and Critique of Recent Contributions,”Regional Science and Urban Economics 8 (1978), 117–128.
Moses, L. E., “Location and the Theory of Production,”Quarterly Journal of Economics 72 (1958), 258–272.
Rothschild, M. and J. E. Stiglitz, “Increasing Risk: I, A Definition,”Journal of Economic Theory 2 (1970), 225–243.
Rothschild, M. and J. E. Stiglitz, “Increasing Risk: II, Its Economic Consequences,”Journal of Economic Theory 3 (1971), 66–84.
Sakashita, N., “Production Function, Demand Function and Location Theory of the Firms,” Papers,Regional Science Association 20 (1967), 109–122.
Sandmo, A., “On the Theory of the Competitive Firm Under Price Uncertainty,”American Economic Review 61 (1971), 65–73.
Silberberg, E.,The Structure of Economics: A Mathematical Analysis, 1978 (McGraw-Hill, Inc.).
Stewart, M. B., “Factor-Price Uncertainty with Variable Proportions,”American Economic Review 68 (1978), 468–473.
Stigler, G. J., “The Economics of Information,”Journal of Political Economy 69 (1961), 213–225.
Webber, M. J.,Impact of Uncertainty on Location, 1972 (M.I.T. Press, Cambridge, MA).
Weber, A.,Theory of the Location of Industries, 1929, translated by C. J. Friedrich (University of Chicago Press, Chicago, IL).
Woodward, R. S., “The Iso-Outlay Function and Variable Transport Costs,”Journal of Regional Science 13 (1973), 349–355.
Author information
Authors and Affiliations
Additional information
This paper was written while I was a Visiting Scholar at Harvard University to which I am indebted for its hospitality.
Rights and permissions
About this article
Cite this article
Mai, Cc. Optimum firm location under factor-price uncertainty. Ann Reg Sci 18, 52–61 (1984). https://doi.org/10.1007/BF01287375
Received:
Revised:
Issue Date:
DOI: https://doi.org/10.1007/BF01287375