Alfred-Weber-Least-Cost-Theory.docVIP

Alfred Weber – German – during 1940’s -Least-Cost Theory – Assumption that owner of plant would try to minimize 3 categories of variable costs: 1) Transportation – most important 2) Labor 3) Agglomeration – phenomenon of spatial clustering or concentration of firms in a relative small area. These share cost of locating there. Thus, costs may go down. Deglomeration occurs when companies and services leave because of the diseconomies of industries’ excessive concentration. Weber concluded – two types of manufacturing industries: 1) Material–oriented 2) Market-oriented Material-oriente