Skip to main content
SpringerLink
Log in

Location of Economic Activity

  • Reference work entry
  • First Online:
The New Palgrave Dictionary of Economics

  • 280 Accesses

Abstract

Location theory develops principles for determining where the various economic activites take place. It was focused on the location of types of land use in agriculture (von Thünen 1826) before addressing the emerging problems of the locational concentration of ‘heavy’ and related industries (Launhardt 1882; Weber 1909) and the shifts of industrial production locations induced by the railroad system and the growth of international trade. The first systematic treatment of industrial location theory was due to Alfred Weber (1909). Location theory was treated as a branch of price theory by Engländer (1924) and Predöhl (1925). This development culminated in Palander’s theory of imperfect competition in spatial markets (1935). A. Lösch (1940) expanded the scope of location theory to include the location of services in ‘central places’, a concept due to W. Christaller (1933), of trade flows and of transportation networks. The systematic study of the location of consumers (households or residential land use) had to await the development of the ‘new’ urban economics (Alonso, Mills, Beckmann). A macroeconomic perspective of locational problems was provided by regional economics – the study of regional differences in population, output, income, capital and growth (Isard 1960). The development of methods for the actual calculation of the optimal location for single facilities or systems of facilities (warehouses, assembly plants, Disneyland, etc.) was undertaken independently of economics by operations researchers, utilizing such new tools as linear and integer programming which are appropriate when the search for optimum locations is restricted to a finite set of points on a grid or in a network (nodes).

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 6,499.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 8,499.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Bibliography

  • Alonso, W. 1967. A reformulation of classical location theory and its relation to rent theory. Papers of the Regional Science Association 19: 23–44.

    Article  Google Scholar 

  • Beckmann, M.J. 1952. A continuous model of transportation. Econometrica 20: 643–660.

    Article  Google Scholar 

  • Beckmann, M.J. 1968. Location Theory. New York: Random House.

    Google Scholar 

  • Beckmann, M.J. 1969. On the distribution of urban rent and density. Journal of Economic Theory 1: 60–67.

    Article  Google Scholar 

  • Beckmann, M.J. 1971. Equilibrium versus optimum: Spacing of firms and patterns of market areas. Northeast Regional Science Review 1: 1–20.

    Google Scholar 

  • Beckmann, M.J. 1976. Spatial price policies revisited. Bell Journal of Economics 7: 619–630.

    Article  Google Scholar 

  • Beckmann, M.J. 1985a. Spatial price policy and the demand for transportation. Journal of Regional Science 25(3): 367–371.

    Article  Google Scholar 

  • Beckmann, M.J. 1985b. A model of perfect competition in spatial markets. International Review of Economics and Business 32(5): 413–419.

    Google Scholar 

  • Beckmann, M.J. and Marschak, T. 1955. An activity analysis approach to location theory. In: Proceedings of the second symposium in linear programming. Washington, DC: National Bureau of Standards and Directorate of Management Analyses.

    Google Scholar 

  • Beckmann, M.J., and T. Puu. 1985. Spatial economics: Density, potential and flow. Amsterdam: North-Holland.

    Google Scholar 

  • Benson, B.L. 1980. Löschian competition under alternative demand conditions. American Economic Review 70: 1098–1105.

    Google Scholar 

  • Capozza, D.R., and R. Van Order. 1978. A generalized model of spatial competition. American Economic Review 68: 896–908.

    Google Scholar 

  • Christaller, W. 1933. Die zentralen Orte in Suddeutschland. Jena: Gustav Fisher. English trans. by C.W. Baskin as Central places in Southern Germany. Englewood Cliffs: Prentice-Hall, 1966.

    Google Scholar 

  • D’Aspremont, C., J. Gabszewicz, and J. Thisse. 1979. On hotelling’s ‘stability in competition’. Econometrica 47(5): 1145–1150.

    Article  Google Scholar 

  • Eaton, B.C., and R.G. Lipsey. 1976. The non-uniqueness of equilibrium in the Löschian model. American Economic Review 66(1): 71–93.

    Google Scholar 

  • Engländer, O. 1924. Theorie des Güterverkehrs und der Frachtsätze. Jena: G. Fischer.

    Google Scholar 

  • Erlenkotter, D. 1978. A dual-based procedure for uncapacitated facility location. Operations Research 16: 992–1009.

    Article  Google Scholar 

  • Greenhut, M.L. 1956. Plant location in theory and practice. Chapel Hill: University of North Carolina Press.

    Google Scholar 

  • Greenhut, M.L. 1970. A theory of the firm in economic space. Austin: Lone Star.

    Google Scholar 

  • Hakimi, S.L. 1964. Optimum location of switching centers and the absolute centers and medians of a graph. Operations Research 12: 450–459.

    Article  Google Scholar 

  • Hanjoul, P., and J.-F. Thisse. 1984. The location of a firm on a network. In Applied decision analysis and economic behaviour, ed. A.J. Hughes Hallet. The Hague: Martinus Nijhoff.

    Google Scholar 

  • Hay, D.A. 1976. Sequential entry and entry-deterring strategies. Oxford Economic Papers 28: 240–257.

    Article  Google Scholar 

  • Hitchcock, F. 1941. The distribution of a product from several sources to numerous localities. Journal of Mathematics and Physics 20: 224–230.

    Article  Google Scholar 

  • Holahan, W.L. 1975. The welfare effects of spatial price discrimination. American Economic Review 65: 498–503.

    Google Scholar 

  • Holahan, W.L., and R.E. Schuler. 1981. The welfare effects of market shapes in the Lüschian Location Model: squares vs. hexagons. American Economic Review 71: 738–746.

    Google Scholar 

  • Hoover, E.M. 1937. Spatial price discrimination. Review of Economic Studies 4: 182–191.

    Article  Google Scholar 

  • Hoover, E.M. 1948. The location of economic activity. New York: McGraw-Hill.

    Google Scholar 

  • Hotelling, H. 1929. Stability in competition. Economic Journal 39: 41–57.

    Article  Google Scholar 

  • Hsu, S. 1983. Pricing in an urban spatial monopoly: A general analysis. Journal of Regional Science 23: 165–175.

    Article  Google Scholar 

  • Isard, W. 1956. Location and space-economy. New York: Wiley.

    Google Scholar 

  • Isard, W. 1958. Interregional linear programming. Journal of Regional Science 1: 1–59.

    Article  Google Scholar 

  • Isard, W. 1960. Methods of regional analysis: An introduction to regional science. New York: Wiley and Technology Press.

    Google Scholar 

  • Kantorovich, L. 1942. On the translocation of masses. Doklady Akademii Nauk CCCP 37: 199–201. Reprinted in Management science 5, October 1958: 1–4.

    Google Scholar 

  • Koopmans, T.C. 1949. Optimum utilization of the transportation system. Econometrica 17(Supplement): 136–146.

    Article  Google Scholar 

  • Koopmans, T.C., and M.J. Beckmann. 1957. Assignment problems and the location of economic activities. Econometrica 25: 53–76.

    Article  Google Scholar 

  • Krarup, J., and P.M. Pruzan. 1985. Ingredients of locational analysis. In Discrete location theory, ed. R.L. Francis and P. Mirchandani. New York: Wiley and Interscience.

    Google Scholar 

  • Launhardt, W. 1882. Die Bestimmung des zweckmässigsten Standortes einer gewerblichen Anlage. Zeitschrift des Vereins Deutscher Ingenieure 26: 106–115.

    Google Scholar 

  • Lerner, A., and H.W. Singer. 1937. Some notes on duopoly and spatial competition. Journal of Political Economy 45: 145–186.

    Article  Google Scholar 

  • Lösch, A. 1940. Die räumliche Ordnung der Wirtschaft. Jena: Gustav Fisher. Trans. as The economics of location. New Haven.: Yale University Press, 1954.

    Google Scholar 

  • Manne, A.S. 1964. Plant location under economies of scale: decentralization and computation. Management Science 11: 213–235.

    Article  Google Scholar 

  • Mills, E.S. 1972. Studies in the structure of the urban economy. Baltimore: Johns Hopkins Press.

    Google Scholar 

  • Mills, E.S., and M.R. Lav. 1964. A model of market areas with free entry. Journal of Political Economy 72: 278–288.

    Article  Google Scholar 

  • Moses, L. 1958. Location and the theory of production. Quarterly Journal of Economics 72: 259–272.

    Article  Google Scholar 

  • Mulligan, G.F. 1981. Lösch’s single-good equilibrium. Annals of the Association of American Geographers 71: 84–94.

    Article  Google Scholar 

  • Ohta, H. 1981. The price effects of spatial competition. Review of Economic Studies 48: 317–325.

    Article  Google Scholar 

  • Paelinck, J.H.P., J.P. Ancott, and J.H. Kinpur. 1983. Formal spatial analysis. Aldershot: Gower.

    Google Scholar 

  • Palander, T. 1935. Beiträge zur Standortstheorie. Uppsala: Almqvist & Wiksell.

    Google Scholar 

  • Ponsard, C. 1983. A history of spatial economic theory. Berlin: Springer-Verlag.

    Book  Google Scholar 

  • Predöhl, A. 1925. Das Standortsproblem in der Wirtschaftstheorie. Weltwirtschaftliches Archiv 21: 294–331.

    Google Scholar 

  • Prescott, E.C., and M. Visscher. 1977. Sequential location among firms with foresight. Bell Journal of Economics 8: 378–393.

    Article  Google Scholar 

  • Puu, T. 1979. The allocation of road capital in two-dimensional space. Amsterdam: North-Holland.

    Google Scholar 

  • Samuelson, P.A. 1952. Spatial price equilibrium and linear programming. American Economic Review 42: 283–303.

    Google Scholar 

  • Singer, H.W. 1937. A note on spatial price discrimination. Review of Economic Studies 5: 75–77.

    Article  Google Scholar 

  • Smithies, A. 1941. Monopolistic price policy in a spatial market. Econometrica 9: 63–73.

    Article  Google Scholar 

  • Stevens, B.H., and C.P. Rydell. 1966. Spatial demand theory and monopoly price policy. Papers of the Regional Science Association 17: 195–204.

    Article  Google Scholar 

  • Stollsteimer, J.F. 1963. A working model for plant numbers and location. Journal of Farm Economics 43: 631–645.

    Article  Google Scholar 

  • von Thünen, J.H. 1826. Der Isolierte Staat in Beziehung auf Landwirtschaft und Nationalökonomie. Stuttgart: Gustav Fischer, 1966.

    Google Scholar 

  • Weber, A. 1909. Ueber den Standort der Industrien. Tubingen: J.C.B. Mohr. Trans. C.J. Friedrich as Theory of the location of industries. Chicago: University of Chicago Press, 1929.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. http://link.springer.com/referencework/10.1007/978-1-349-95121-5

    M. J. Beckmann

Authors
  1. M. J. Beckmann
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Copyright information

© 2018 Macmillan Publishers Ltd.

About this entry

Check for updates. Verify currency and authenticity via CrossMark

Cite this entry

Beckmann, M.J. (2018). Location of Economic Activity. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1144

Download citation

Publish with us

Policies and ethics

Search

Navigation