Location Theory and Economic Models

Flashcards covering the major concepts and theorists of Location Theory, including von Thunen, Weber, Alonso, Christaller, and others.

What is the primary concern of Location Theory?

It is concerned with the geographic location of economic activities, addressing what activities are located where and why.

What is the fundamental assumption regarding agents in Location Theory?

Agents act in their own self-interest, meaning firms maximize profits and individuals maximize utility.

Which factor is typically given the most weight in determining location?

Transport costs.

How do early and modern location theories differ in their view of the individual?

Early theory focused on the 'rational economic man,' while modern theory considers the 'real individual' influenced by behavioral geography.

According to Christaller (1932), what generates the pattern of urban spatial structure?

The aggregate location decisions of businesses and households.

What are the three core inter-relationships identified in Location Theory?

Urban spatial structure, Business location choices, and Innovation and technological change.

What are the five categories of economic activities described in the notes?

Primary (Agriculture, Mining), Secondary (Manufacturing, Construction), Tertiary (Retail, Services), Quaternary (IT, R&D), and Quinary (Producer services, Management).

What is David Ricardo’s definition of 'Economic Rent'?

The difference between the produce obtained by the employment of two equal quantities of capital and labor; essentially payment over and above what is necessary to stay in business.

Who is often referred to as the 'father of location theorists'?

Johann Heinrich von Thunen.

According to von Thunen, what is 'Locational rent'?

Economic rent minus the costs associated with transporting products to market.

What is the formula for Locational rent ($L$) in von Thunen’s model?

$$L = Y(P - C) - YDF$$

What are the variables in von Thunen’s Locational rent formula?

$L$ is Locational rent, $Y$ is Yield, $P$ is Market price, $C$ is Production cost, $D$ is Distance from market, and $F$ is Transport cost.

What were the simplified assumptions of von Thunen’s 'Isolated State' model?

Centrally located city, surrounded by wilderness, completely flat land, consistent soil/climate, transport via oxcart with no roads, and rational farmer behavior.

How does the presence of a navigable river modify von Thunen’s Isolated State pattern?

It modifies the pattern because the cost of river transport is low for bulky commodities compared to high overland transport costs.

What was the primary focus of Alfred Weber’s location theory?

Industrial location decisions based on minimizing the total costs of transporting material inputs and final products (least-cost location).

What is Weber’s 'Weight-Losing Case'?

The final product weighs less than the raw materials; the processing plant should be located at the source of the raw material to minimize costs.

What is Weber’s 'Weight-Gaining Case'?

The final product is heavier than the raw materials; the processing plant should be located at the market to minimize costs.

What is William Alonso’s 'Bid-Price Curve'?

A set of combinations of land prices and distances from the city center among which an individual is indifferent or satisfied.

What is the relationship between transport costs and rent in Alonso’s model?

An inverse relationship; when transportation costs are high, rent is low.

What does the 'Bid-Rent Curve' indicate?

How much a person is prepared to pay for a unit of land at varying distances from the city center (CBD).

In an urban Bid-Rent Curve, which sector typically occupies the area closest to the CBD?

Commercial.

What determines retailing revenue according to locational determinants?

The size of the shopping catchment area or hinterland in terms of population and purchasing power.

What is the 'Threshold population' in Walter Christaller’s Central Place Theory?

The minimum population size required to profitably maintain a service.

In Central Place Theory, what is the 'Range'?

The average maximum distance people are willing to travel to purchase goods and services.

What are the three principles of arrangement in Christaller’s Central Place Theory?

Marketing Principle ($K=3$), Transportation Principle ($K=4$), and Administrative Principle ($K=7$).

What shape does Christaller use to maximize served areas in his model?

Hexagonal.

How did August Losch improve upon Weber’s theory?

By introducing the demand factor and asserting firms maximize profit where the difference between revenues and costs is greatest.

What concept did Walter Isard introduce to the isotropic sphere?

Substitution; site selection is seen as substituting among various production factors to find the best site.

What does Allen Pred’s behavioral matrix analyze?

The quantity and quality of information available to a decision maker (y-axis) versus their ability to use that information (x-axis).

What did David Smith introduce with the 'Impact on Uncertainty of Location' (1972)?

The uncertainty principle, which dismisses the assumptions of perfect knowledge and complete information.