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Demand, Location, and the Theory of Production


  • Shieh, Yeung-Nan


This paper presents a profit-maximizing location model to investigate the impact of demand on the optimum location decision of a firm in the Weberian triangle. It will be shown that: (1) when the distance of the firm's location from the product market is held constant, the optimum location for the firm would be independent of the demand function if and only if the expansion path in input space is linear through the origin as demand varies; (2) when the distance of the firm's location from the product market is a decision variable, the optimum location for the firm would be independent of the demand function if and only if the production function is linearly homogeneous.

Suggested Citation

  • Shieh, Yeung-Nan, 1989. "Demand, Location, and the Theory of Production," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 23(2), pages 93-103.
  • Handle: RePEc:spr:anresc:v:23:y:1989:i:2:p:93-103

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    References listed on IDEAS

    1. Raymond B. Palmquist & Adis Israngkura, 1999. "Valuing Air Quality With Hedonic and Discrete Choice Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1128-1133.
    2. Brasington, David M. & Hite, Diane, 2005. "Demand for environmental quality: a spatial hedonic analysis," Regional Science and Urban Economics, Elsevier, vol. 35(1), pages 57-82, January.
    3. Kerry Smith, V. & Sieg, Holger & Spencer Banzhaf, H. & Walsh, Randall P., 2004. "General equilibrium benefits for environmental improvements: projected ozone reductions under EPA's Prospective Analysis for the Los Angeles air basin," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 559-584, May.
    4. Bourassa, Steven C. & Hoesli, Martin & Peng, Vincent S., 2003. "Do housing submarkets really matter?," Journal of Housing Economics, Elsevier, vol. 12(1), pages 12-28, March.
    5. Abraham, Jesse M. & Goetzmann, William N. & Wachter, Susan M., 1994. "Homogeneous Groupings of Metropolitan Housing Markets," Journal of Housing Economics, Elsevier, vol. 3(3), pages 186-206, September.
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