ancient cities

456 Location Theory
Staat (The Isolated State). He investigated the
relationship between the distance from a market
and the pattern of land use by hypothesizing an isolated
area located in a homogeneous environmental
plain. A single city served as the market and was
surrounded by farmland. Von Thünen assumed
that farmers attempt to maximize profit, or economic
rent, with the determining factor being
transportation costs. He also assumed that transportation
costs rise with the distance from the
market and that the fertility of the soil is equal
across the area. Because transportation costs also
increase as the weight of the specific farm product
itself increases, the resultant geography is a series
of concentric circles with a different crop planted
in each circle.
Location theory exists for secondary industries
as well, specifically goods production or manufacturing.
In 1909, Alfred Weber developed the
notion of a location triangle in his book, Über
den Standort der Industrien (Theory of the
Location of Industries). The location triangle is
made up of three fixed locations: a market and
two raw material sources. Weber sought to determine
the optimum location of firms, given the
requirement that they minimize transportation
costs within the triangle. He assumed that production
costs are the same everywhere. Thus, transport
costs will control the choice of location. They are
a function of the weight of the raw materials and
the commodity being produced and the distances
between the location of raw material sources, the
market, and the firm. The optimum location is
the center of gravity of the triangle as determined
by transportation costs. To this, Weber added
labor costs and the economies of agglomeration
(i.e., the spatial concentration of firms).
Minimizing transportation costs and labor costs
and maximizing agglomeration economies results
in an ideal location, one that minimizes total
production costs.
A third major contribution to location theory is
the central place theory developed by Walter
Christaller in 1933. The main function of a central
place is to supply goods and services to the surrounding
population and to do so by minimizing
the travel costs of the population in the surrounding
region. The determining factor in its location is the
threshold; that is, the smallest market or trade
area that is needed to bring a new firm, service
provider, or city into existence and keep it functioning.
Once a threshold has been established, the
central place will expand its economic activities by
adding higher-order goods that have larger market
areas. This will continue until the range—the
maximum distance that consumers will travel to
buy these services or goods—is reached.
Competitive forces will enable some places to
have a greater proportion of higher-order goods—
and thus more residents—than others, and this
will lead to a hierarchy of places of different size.
In this way, Christaller explained how settlements
and places (or cities) are located in relation to one
another and the number, distance between, and
size of settlements within a region.
Since these earlier formulations, location theory
has moved away from its emphasis on transportation
costs and markets. Emphasis has shifted to
agglomeration economies, access to educated
labor, quality of life issues, information, and the
availability of government subsidies. As economies
have become less dominated by agriculture
and natural resource extraction and less reliant on
heavy manufacturing, location theorists have
focused more on the location of light manufacturing,
retail services, and a variety of businesses for
which transportation costs are less important
than highly skilled workers, complementary
industries, and telecommunications technologies.
Nevertheless, the issue remains where to locate
one’s business and, thus, what factors have to be
taken into account.
See also Fujita, Masahisa; Lösch, August; Urban
Economics; Urban Geography
Further Readings
Eun Jin Jung
Chisholm, M. 1962. Rural Settlement and Land Use: An
Essay in Location. London: Hutchinson University
Library.
Christaller, W. 1966. Central Places in Southern
Germany. Translated by C. W. Baskin. Englewood
Cliffs, NJ: Prentice Hall.
Lösch, A. 1952. The Economics of Location. Translated
by W. H. Woglom. New Haven, CT: Yale University
Press.
Smith, D. M. 1981. Industrial Location: An Economic
Geographical Analysis. New York: Wiley.