Topic 3: Location Theory (A Foundation for Planning)

ARPLANN3

Location Theory

• Is concerned with the geographic location of economic activity,

• An integral part of economic geography, regional science and spatial economics

• It addresses the questions of what economic activities are located where and why.

• It explains the pattern of land use

Economic Geography

It refers to the study of human’s economic activities under varying sets of conditions which is associated with production, location, distribution, consumption, exchange of resources and spatial organization of economic activities across the world.

• Theoretical Economic Geography

• Regional Economic Geography

• Critical Economic Geography

• Behavioral Economic Geography

Areas of Study (Economic Geography)

Theoretical Economic Geography

Building theories about the spatial arrangement and distribution of economic activities.

Regional Economic Geography

It examines the economic conditions of particular regions or countries, Deals with economic regionalization.

Critical Economic Geography

Approach from the point of view of contemporary critical geography and its philosophy.

Behavioral Economic Geography

Examines the cognitive processes underlying spatial, reasoning, location decision making and behavior of firms and individuals.

Alfred Weber

formulated a theory of Industrial location in which industry is located where the transportation cost of raw materials and final product is minimum.

1. The centers of consumption are fixed.

2. The cost of raw material is the same at all places even though the distribution of deposits of raw materials is uneven.

3. There are fixed centers of labor supply, and they have unlimited supplies of labor at cost.

4. Transport cost demands upon weight of material and distance.

Assumptions of Weber’s Theory of Location

1. Activities having a high level of use of raw materials tend to locate near supply sources. (aluminum factories should be near energy sources / electricity, or port area)

2. Activities using ubiquitous materials, such as water, tends to locate close to market.

3. Weber developed a material index, which is simply the weight of the input divided by the weight if final product (output).

4. If the material index is higher than 1, the location tends to be towards materials sources.

5. If it is less than 1, the location tends to be toward the market

Weber’s Location Theory Explanation

1. Least transportation cost location,

2. Labor cost, and

3. Agglomeration economics

Three Stages of Weber’s Location Theory

Market

M

Raw Materials (high level use materials)

S1

Raw Materials (ubiquitous)

S2

Optimal Factory Location

P

Tons of materials from S1

w (S1)

Tons of materials from S2

w (S2)

Von Thunen

a farmer and amateur economist, 1783-1850

Walther Christaller

developed the Central Place Theory in 1930, to explain the size and spacing of cities that specialized in selling goods and services.

Central Place Theory

Is a spatial theory on urban geography that attempts to explain the reasons behind the distribution patterns, size, and number of cities and towns around the world

Threshold

the minimum market needed to bring a firm or city selling goods and services into existence and to keep it in business.

Range

the average maximum distance people will travel to purchase goods and services normally; the threshold is found within the range.

• Range

• Threshold

Two Basic Concepts of Central Place Theory

Concentric Zone Theory

• First model to explain and predict urban growth

• Based on growth in Chicago.

Ernest Burgess

Developed the Concentric Zone Theory in the 1920s

1. Central Business District

2. Transition Zones

3. Working Class Zone

4. Middle Class Residences

5. Suburban Ring-Commuter Zone

Five Functional Zones

Hoyt Sector Model

• Based on the mapping of eight, contrasting housing variables.

• Developed from Burgess’s use of simple concentric ring, to include wedges and sectors of land use.

Multiple- Nuclei Model

• Suggested that functional zonation occurred around multiple centers, or nodes.

• The characteristics of each node either attracted or repelled certain types of activities, resulted to the existence of patchwork of land uses with its own center or nucleus

Multiple- Nuclei Model

developed the multiple –nuclei model in the 1940’s.

Bid Rent Theory

Geographical Economic Theory that refers to how the price and demand for real estate change as the distance from the central business district.