Weber's Least Cost Theory

By- Kaylea King

The Least Cost Theory

The Least Cost Theory is a model developed by Alfred Weber according to which the location of manufacturing establishments is determined by three critical expenses: transportation, labor, and agglomeration.

Bulk Reducing/Gaining Industries

Bulk-Reducing Industries- A production where the import weighs more than the final product. To reduce costs bulk reducing industries needs to locate near its source of inputs.
Example- Copper Production has four steps and the first three steps are to reduce the size of the final product.
Example- Paper production uses large trees to create thin sheets of paper.

Bulk-Gaining Industries- Industry that makes something that gains volume or weight during production. The finished product weighs more than the raw materials.
Example- Beverage Industries receive the empty bottles that they fill up with drinks, so the finished product gains weight.
Example- Auto production takes the separate parts that make up cars and combine them to create a car.