Weber’s Least-Cost Theory

Weber’s Least-Cost Weber’s Least-Cost TheoryTheoryOne of his core assumption is that firms will chose a location in view to minimize their costs.

The BasicsThe BasicsAlfred Weber formulated a theory of industrial location in which an industry is located where the transportation costs of raw materials and final product is a minimum.

In one the weight of the final product is less than the weight of the raw material going into making the product. This is the weight losing or BULK-REDUCING industry.

Ex: Copper productionsteel production

BULK-GAININGBULK-GAINING In the other the final product is heavier than

the raw material that require transport. Usually this is a case of a raw material such as

water being incorporated into the product. This is called the weight-gaining or BULK –

GAINING industries.

Brick- BunnyBrick- BunnyWhat happens when a variety of

materials is needed for the production?

Production point moves closer to the heaviest raw material to balance transportation costs.

ENERGY SOURCE??ENERGY SOURCE??

The availability of an energy supply is another factor in the location of industry, but the factor used to be much more important than it is today.

The early British textile mills were site-tied” because they depended on falling water to drive the looms.

Today, power comes from different sources and can be transmitted or transported over long distances.

Exceptions occur when an industry needs very large amounts of energy, for example, certain metallurgical and chemical industries.