Weber's Least Cost Theory
by Anthony and Ashlyn
WHAT IS IT?!
A theory specifying the effects of certain factors on the location and success of businesses.
1. Transportation- the ability (cost wise) to move a product
2. Labor- the sum cost of using human beings to produce the product
3. Agglomeration- the ability to be interdependent between corporations
BULK-REDUCING AND BULK-GAINING INDUSTRIES
Bulk-Reducing Industries: when corporations locate themselves near raw materials to lower the cost of transporting those materials
Bulk-Gaining Industries: when corporations locate themselves near markets allowing for increased sales of their products
EXAMPLES OF BULK-REDUCING INDUSTRIES
EXAMPLES
1. Heavy metals such as steel for guarding fences2. Metals such as copper
REASONING
Both of these examples are extremely expensive to transport so the factories are located nearby as to lower transportation costs.
EXAMPLES OF BULK-GAINING INDUSTRIES
EXAMPLES
1. Soft drink companies2. Produce companies
REASONING
Both of these industries are focused on selling to markets and need to be close to them so that they make more profit and diminish cost for transport to the markets.