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The Location of a Firm on a Network

  • Pierre Hanjoul
  • Jacques-François Thisse
Chapter
Part of the Advanced Studies in Theoretical and Applied Econometrics book series (ASTA, volume 3)

Abstract

Since the pioneering work of Launhardt and Weber (1909), the location theory of the firm has developed from a particular model of the firm in which the location decision criterion is the minimisation of transportation costs.1 Actually it is not surprising that this model, called hereafter Weberian, still is the basic reference in the field in spite of its difference with the neo-classical model of the firm. One has only to remember the minor position held by spatial economics in the mainstream economics over several decades.2 Despite appearances, this theoreticl hiatus is of no serious consequences for the study of location problems. Indeed, the Weberian model now appears to be a short-cut leading to the neo-classical model. The argument is simple and it will be used in several propositions of this chapter: a place which maximises the profit of the firm at the same time minimises the transportation cost included in the profit.3 Consequently, the characteristics of the Weberian model solution remain valid for the neo-classical model solution. This explains why, in some parts of the chapter, we follow the lines of proofs given elsewhere. Unfortunately, there are exceptions to that equivalence rule which, not surprisingly, correspond to location problems which are not easy to deal with from both the theoretical and numerical points of view. Such a problem is discussed in section 3.

Keywords

Transportation Cost Equilibrium Location Location Theory Market Place Candidate Site 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Martinus Nijhoff Publishers. Dordrecht/Boston/Lancaster 1984

Authors and Affiliations

  • Pierre Hanjoul
    • 1
  • Jacques-François Thisse
    • 1
  1. 1.University of LouvainBelgium

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