The Least cost Theory
Explaining Where Industries Cluster
Bulk-reducing and Bulk-Gaining industries
Example: The lumber industry is a major industry that involves the harvesting and refinement of wood. An industry that comes from from the lumber industry is the paper industry. In order to create paper, the factories reduce the density of the wood by making small chips of wood and making a paste out of the chips and water. It is then heated and pressurized to create paper. This represents a bulk reducing industry because the ability to transport the product is much more simple and efficient than transporting the raw material needed, lumber.
Bulk-Gaining: This is an industry in which mass or volume is gained with the finished product, and is normally closer to the actually market for the industry.
Example: The kitchen appliance industry involves putting together many small electronic parts to make a much larger, and much bulkier machine, such as a dishwasher, or refrigerator, which are both heavy products created by metals, and electronics. The reason this is a bulk-gaining industry is because the products gain much Weigh and volume.