GEOG 2LE3 Lecture Notes - Lecture 7: Outsourcing, Harold Hotelling, Location Theory
19 Apr 2018
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Document Summary
In the late eighteenth century manufacturing activity expanded rapidly and became concentrated in a few western countries. Fordist mass production became the leading model of organization. Explains the optimum location of industrial facilities using the locational triangle. Locations are most influenced by locations chosen by its competitors. Competitive firms with identical cost structures arrange themselves to assure a measure of spatial monopoly in their combined market. Major emphasis is on revenue rather than cost. Firm will locate where the net profit is greatest. The production location will be where the difference between production costs and sales income is the greatest. Comparative advantage: the principle that an area produces the items for which it has the greatest ratio of disadvantage in comparison to other areas, assuming free trade exists, outsourcing: producing parts or products abroad for domestic sale. Development state policies promote industrialization by: protecting infant industries, supplying education and health, supplying economic infrastructure.
