Location theory is concerned with the geographic location of economic activity; it has become an integral part of
economic geographyEconomic geography is the study of the location, distribution and spatial organization of economic activities across the Earth. The subject matter investigated is strongly influenced by the researcher's methodological approach. Neoclassical location theorists, following in the tradition of Alfred...
,
regional scienceRegional science is a field of the social sciences concerned with analytical approaches to problems that are specifically urban, rural, or regional...
, and spatial economics. Location theory addresses the questions of what economic activities are located where and why. Location theory rests — like
microeconomic theoryMicroeconomics is a branch of economics that studies how households and firms make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold...
generally — on the assumption that agents act in their own self interest. Thus firms choose locations that maximize their profits and individuals choose locations that maximize their utility.
While others should get some credit for even earlier work (e.g.,
Richard CantillonRichard Cantillon , acknowledged by many historians as the first great economic "theorist", is an obscure character. This much is known: he was an Irishman with a Spanish name who lived in France most of his life...
,
Etienne Bonnot de CondillacÉtienne Bonnot de Condillac was a French philosopher.-Biography:He was born at Grenoble of a legal family, and, like his elder brother, the well-known political writer, abbé de Mably, took holy orders at Saint-Sulpice in Paris and became abbé de Mureau.In both cases the profession was hardly more...
,
David HumeDavid Hume was a Scottish philosopher, economist, historian and a key figure in the history of Western philosophy and the Scottish Enlightenment...
,
Sir James D. SteuartSir James Denham-Steuart, 7th Baronet was a British economist.-Life:He was the only son of Sir James Steuart, Solicitor General for Scotland under Queen Anne and George I, and was born in Edinburgh...
, and
David RicardoDavid Ricardo was an English political economist, often credited systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. He was also a member of Parliament, businessman, financier and speculator, who amassed a considerable...
), it was not until
Johann Heinrich von ThünenJohann Heinrich von Thünen was a prominent nineteenth century economist . Von Thünen was a Mecklenburg landowner, who in the first volume of his treatise, The Isolated State , developed the first serious treatment of spatial economics, connecting it with the theory of rent...
's first volume of
Der Isolierte Staat in 1826 that location theory can be said to have really gotten underway.
Location theory is concerned with the geographic location of economic activity; it has become an integral part of
economic geographyEconomic geography is the study of the location, distribution and spatial organization of economic activities across the Earth. The subject matter investigated is strongly influenced by the researcher's methodological approach. Neoclassical location theorists, following in the tradition of Alfred...
,
regional scienceRegional science is a field of the social sciences concerned with analytical approaches to problems that are specifically urban, rural, or regional...
, and spatial economics. Location theory addresses the questions of what economic activities are located where and why. Location theory rests — like
microeconomic theoryMicroeconomics is a branch of economics that studies how households and firms make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold...
generally — on the assumption that agents act in their own self interest. Thus firms choose locations that maximize their profits and individuals choose locations that maximize their utility.
Origins
While others should get some credit for even earlier work (e.g.,
Richard CantillonRichard Cantillon , acknowledged by many historians as the first great economic "theorist", is an obscure character. This much is known: he was an Irishman with a Spanish name who lived in France most of his life...
,
Etienne Bonnot de CondillacÉtienne Bonnot de Condillac was a French philosopher.-Biography:He was born at Grenoble of a legal family, and, like his elder brother, the well-known political writer, abbé de Mably, took holy orders at Saint-Sulpice in Paris and became abbé de Mureau.In both cases the profession was hardly more...
,
David HumeDavid Hume was a Scottish philosopher, economist, historian and a key figure in the history of Western philosophy and the Scottish Enlightenment...
,
Sir James D. SteuartSir James Denham-Steuart, 7th Baronet was a British economist.-Life:He was the only son of Sir James Steuart, Solicitor General for Scotland under Queen Anne and George I, and was born in Edinburgh...
, and
David RicardoDavid Ricardo was an English political economist, often credited systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. He was also a member of Parliament, businessman, financier and speculator, who amassed a considerable...
), it was not until
Johann Heinrich von ThünenJohann Heinrich von Thünen was a prominent nineteenth century economist . Von Thünen was a Mecklenburg landowner, who in the first volume of his treatise, The Isolated State , developed the first serious treatment of spatial economics, connecting it with the theory of rent...
's first volume of
Der Isolierte Staat in 1826 that location theory can be said to have really gotten underway. Indeed, the prominent
regional scientistRegional science is a field of the social sciences concerned with analytical approaches to problems that are specifically urban, rural, or regional...
Walter IsardWalter Isard is a prominent American economist, the principal founder of the discipline of Regional Science, as well as one of the main founders of the discipline of Peace Science.-Life and contributions:...
has called von Thünen "the father of location theorists." In
Der Isolierte Staat, von Thünen notes that the costs of transporting goods consumes some of Ricardo's economic rent. He notes that because these transportation costs and, of course, economic rents, vary across goods, different land uses and use intensities will result with distance from the marketplace.
A German hegemony of sorts seems to have taken hold in location theory from the time of von Thünen through to
Walter ChristallerWalter Christaller , was a German geographer whose principal contribution to the discipline is Central Place Theory , first published in 1933...
's 1933 book
Die Zentralen Orte in Sűddeutschland, which formulated much of what is now understood as
central place theoryCentral place theory is a geographical theory that seeks to explain the number, size and location of human settlements in an urban system. The theory was created by the German geographer Walter Christaller, who asserted that settlements simply functioned as 'central places' providing services to...
. An especially notable contribution was one by
Alfred WeberAlfred Weber was a German economist, sociologist and theoretician of culture whose work was influential in the development of modern economic geography.-Life:...
, who published
Über den Standort der Industrien in 1909. Working from a model akin to a physical frame adapted from some ideas by
Pierre VarignonPierre Varignon was a French mathematician. He was educated at the Jesuit College and the University in Caen, where he received his M.A. in 1682. He took Holy Orders the following year....
(a
Varignon frameA Varignon frame is a system of weights and pulleys used by geographers to help determine optimum location. For example, the weights might represent the relative cost of transporting particular goods to or from particular locations, to help a firm decide the most cost effective site to locate a...
), Weber applies freight rates of resources and the finished goods along with the finished good's production function to develop an algorithm that identifies the optimal location for manufacturing plant. He also introduces distortions induced by labor and both agglomerative and deglomerative forces. Weber then moves on to discuss groupings of production units, anticipating Lösch's market areas.
Carl Wilhelm Friedrich LaunhardtCarl Wilhelm Friedrich Launhardt was a German mathematician and economist.Launhardt was born in Hanover, the capital of the Kingdom of Hanover. He studied and taught at Hanover's technical school...
conceived much of that for which Alfred Weber received credit, prior to Weber's work. Moreover, his contributions are surprisingly more modern in their analytical content than Weber's. This suggests that Launhardt was ahead of his time and simply was not readily understood by many of his contemporaries. Whether Weber was familiar with Launhardt's publications remains unclear. Weber was most certainly influenced by others, most notably Wilhelm Roscher and
Albert SchäffleAlbert Eberhard Friedrich Schäffle , German statesman and political economist, was born at Nürtingen in Württemberg, and in 1848 became a student at the University of Tübingen....
, who seem likely to have read Launhardt's work. Regardless, location theoretic thought blossomed only after Weber's book was published.
External links