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Transport economies of scale and firm location

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  • Xu, Shaofeng

Abstract

This paper studies the impact of economies of scale in transportation on a firm’s location decision. We relate the location problem to weighted Fermat problems and ramified optimal transportation problems and analyze how transport technologies affect the firm’s transportation and location choices. It is found that in general when the level of transport economies of scale is high, the firm locates its factory in the interior of the Weber triangle with a branching transport structure. Two examples are constructed to illustrate how interactions between transport technology and production technology would affect the firm’s input purchase and factory location.

Suggested Citation

  • Xu, Shaofeng, 2013. "Transport economies of scale and firm location," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 337-345.
    • Handle: RePEc:eee:matsoc:v:66:y:2013:i:3:p:337-345
    DOI: 10.1016/j.mathsocsci.2013.07.004
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    References listed on IDEAS

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