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Variable Transportation Rates and The Profit-Maximization Location Theory of The Firm

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  • Yeung-Nan Shieh

    (Department of Economics, and the School of Management, the University of Alaska Fairbanks, Fairbanks, Alaska, 99775-0580)

Abstract

This paper examines the role of variable transportation rates on the independence between optimum location and demand. When transportation rates are a function of quantity and distance, it shows that the independence between optimum location and demand crucially depends upon whether the elasticities of transportation rates with respect to quantity are constant and identical ; and the ratio of marginal products is equal to the ratio of marginal transportation costs. This is quite different from the well-known Miller and Jensen result.

Suggested Citation

  • Yeung-Nan Shieh, 1988. "Variable Transportation Rates and The Profit-Maximization Location Theory of The Firm," Urban Studies, Urban Studies Journal Limited, vol. 25(4), pages 341-347, August.
    • Handle: RePEc:sae:urbstu:v:25:y:1988:i:4:p:341-347
    DOI: 10.1080/00420988820080441
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    References listed on IDEAS

    as
    1. Leon N. Moses, 1958. "Location and the Theory of Production," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 72(2), pages 259-272.
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    4. Shieh, Yeung-nan & Mai, Chao-cheng, 1984. "Location and the theory of production Clarifications and extensions," Regional Science and Urban Economics, Elsevier, vol. 14(2), pages 199-218, May.
    5. Khalili, Amir & Mathur, Vijay K. & Bodenhorn, Diran, 1974. "Location and the theory of production: A generalization," Journal of Economic Theory, Elsevier, vol. 9(4), pages 467-475, December.
    6. Mathur, Vijay K., 1979. "Some unresolved issues in the location theory of the firm," Journal of Urban Economics, Elsevier, vol. 6(3), pages 299-318, July.
    7. William Alonso, 1967. "A Reformulation Of Classical Location Theory And Its Relation To Rent Theory," Papers in Regional Science, Wiley Blackwell, vol. 19(1), pages 23-44, January.
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