Input price variation across locations and a generalized measure of cost efficiency
We propose a non-parametric model for global cost minimization as a framework for optimal allocation of a firm's output target across multiple locations, taking account of differences in input prices and technologies across locations. This should be useful for firms planning production sites within a country and for foreign direct investment decisions by multi-national firms. Two illustrative examples are included. The first example considers the production location decision of a manufacturing firm across a number of adjacent states within the US. In the other example, we consider the optimal allocation of US and Canadian automobile manufacturers across the two countries.
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Volume (Year): 116 (2008)
Issue (Month): 2 (December)
Pages: 208-218
| Handle: | RePEc:eee:proeco:v:116:y:2008:i:2:p:208-218 |
| Contact details of provider: | Web page: http://www.elsevier.com/locate/ijpe
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References listed on IDEAS
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