By Patrick O’Sullivan (auth.)
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Sample text
Even though rates per ton mile have favoured live animals over carcasses, the fact that the dressed meat of a steer weighs only 54 per cent of the live animal favours locations closer to material than market for slaughtering. We have implied a very simple linear transport cost function in this discussion, while in Chapter 5 we will develop a much more elaborate version, with terminal costs and a tapering of cost with greater mileage. One set of terminal costs can usually be avoided by locating the production process at either the material source or the market.
E. (CA -CF will be negative and the iron-maker will want to locate at the maximum value of d, where d = D at the material source F. Finally, if the cost of moving iron and iron ore are equal, so that CA = CF , the coefficient of d will be zero and transport costs will be CFD wherever the furnace is located. The plant may then be located at A or F or any point between them. In our iron-making case with a big weight loss involved and equal ton » Land Uses and Locations 39 mile rates on materials and product, the material source would be the optimal location.
The location of such a regional, natural monopoly - if the demand for its product is pretty inelastic - is determined by the balance between assembly and distribution costs. As an example we can consider the production of iron in our fictional economy and assume the price and quantity to be produced is fixed. The market is localized at the centre of the plain A, where tools are manufactured. 11, a distance D from the market. The other raw material is 38 Geographical Economics Ae eF ~----------D----------~ ..