Spaces of Manufacturing

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Spaces of Manufacturing
Market
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Weberian Model Least Cost Approach

• Assumptions
• Uniform or isotropic plain in a single country
• One finished product at a time is considered
• The raw materials are fixed at certain locations
  (known) and the point of consumption is also
  fixed and known.
• Labor is fixed geographically but its
  availability is unlimited.
• Transportation costs are a direct function of
  weight of the item and the distance shipped.

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Factors Shaping Weberian Spatial Outcomes

• Transportation sets the general regional pattern
  of manufacturing
• Then, consider spatial variations in the cost of
  labor
• The final determinant is the local factors

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Raw Material Classes

• Spatial Distribution of Availability
• Ubiquitous raw materials -- Air
• Localized raw materials -- Coal
• Weight Loss during Processing
• Pure raw materials water
• Gross raw materials Iron ores

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Transportations Costs

• The cost of collecting raw materials (RM)
• The cost of distributing the finished products
  (FP)
• The total transportation cost (TTC)
• TTC RM FP

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Case 1 Bottled and canned soft drink
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Case 2 Copper Ore
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Further Elaborations of Weberian Models

• Isotim a line of equal transport cost for any
  material or product
• Isodapane a line of equal total transport cost

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Cont

• Critical Isodapane isodapane which signifies the
  outer limit for alternative locations
  (alternative to the location with minimum
  aggregate transport costs) in a Weberian
  locational triangle or other polygon. Its
  specification is dependent on the savings (labor
  cost, scale- or agglomeration economies)
  associated with such an alternative beyond the
  critical isodapane, savings are not sufficient to
  compensate for the additional transport costs.

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Finding Critical Isodapane

• Total transportation cost is minimized at Point
  T, 4. As we move away from T, total
  transportation costs increase. At Point L, labor
  costs are 2 per unit less than at T. Then where
  do you want to locate your firm? Find a critical
  isodapane, too.

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Critiques on Webers Model

• Ignored geographic variation in market demand
• Assumptions on Transportation costs were not
  realistic distance is only a partial measure of
  TC. Terminal costs (e.g. Miami).
• Labor is Mobile and its availability is limited
• Multiple products and diverse markets
• Underestimation of agglomeration