胡佛《區(qū)域經濟學導論》英文版An Introduction to Regional Economics

AnIntroductiontoRegionalEconomics

EdgarM.HooverandFrankGiarratani

1Introduction

1.1WHATISREGIONALECONOMICS?

Economicsystemsaredynamicentities,andthenatureandconsequencesofchangesthattakeplaceinthesesystemsareofconsiderableimportance.Suchchangeaffectsthewell-beingofindividualsandultimatelythesocialandpoliticalfabricofcommunityandnation.Associalbeings,wecannothelpbutreacttothechangesweobserve.Forsomepeoplethatreactionisquitepassive;theeconomychanges,andtheyfindthattheirimmediateenvironmentissomehowdifferent,forcingadjustmenttothenewreality.Forothers,changesintheeconomicsystemrepresentachallenge;theyseektounderstandthenatureoffactorsthathaveledtochangeandmay,inlightofthatknowledge,adjusttheirownpatternsofbehaviororattempttobringaboutchangeintheeconomic,political,andsocialsystemsinwhichtheyliveandwork.

Inthiscontext,regionaleconomicsrepresentsaframeworkwithinwhichthespatialcharacterofeconomicsystemsmaybeunderstood.Weseektoidentifythefactorsgoverningthedistributionofeconomicactivityoverspaceandtorecognizethatasthisdistributionchanges,therewillbeimportantconsequencesforindividualsandforcommunities.

Thus,regionalor"spatial"economicsmightbesummedupinthequestion"Whatiswhere,andwhy—andsowhat?"Thefirstwhatreferstoeverytypeofeconomicactivity:notonlyproductionestablishmentsinthenarrowsenseoffactories,farms,andmines,butalsootherkindsofbusinesses,households,andprivateandpublicinstitutions.Wherereferstolocationinrelationtoothereconomicactivity;itinvolvesquestionsofproximity,concentration,dispersion,andsimilarityordisparityofspatialpatterns,anditcanbediscussedeitherinbroadterms,suchasamongregions,ormicrogeographically,intermsofzones,neighborhoods,andsites.Thewhyandthesowhatrefertointerpretationswithinthesomewhatelasticlimitsoftheeconomist'scompetenceanddaring.

Regionaleconomicsisarelativelyyoungbranchofeconomics.Itslatestartexemplifiestheregrettabletendencyofformalprofessionaldisciplinestolosecontactwithoneanotherandtoneglectsomeimportantproblemareasthatrequireamixtureofapproaches.Untilfairlyrecently,traditionaleconomistsignoredthewherequestionaltogether,findingplentyofproblemstooccupythemwithoutgivinganyspatialdimensiontotheiranalysis.Traditionalgeographers,thoughdirectlyconcernedwithwhatiswhere,lackedanyrealtechniqueofexplanationintermsofhumanbehaviorandinstitutionstosupplythewhy,andresortedtomeredescriptionandmapping.Traditionalcityplanners,similarlylimited,remainedpreoccupiedwiththephysicalandaestheticaspectsofidealizedurbanlayouts.

Thisunfortunatesituationhasbeencorrectedtoaremarkableextentwithinthelastfewdecades.Individualswhocallthemselvesbyvariousprofessionallabels—economists,geographers,ecologists,cityandregionalplanners,regionalscientists,andurbanists—havejoinedtodevelopanalyticaltoolsandskills,andtoapplythemtosomeofthemostpressingproblemsofthetime.

TheunflaggingpioneerworkandtheintellectualandorganizationalleadershipofWalterIsardsincethe1940splayedakeyroleinenlistingsupportfromvariousdisciplinestocreatethisnewfocus.Hisdomainof"regionalscience"isextremelybroad.Thisbookwillfollowalesscomprehensiveapproach,usingthespecialinterestsandcapabilitiesoftheeconomistasapointofdeparture.

1.2THREEFOUNDATIONSTONES

Itwillbehelpfultorealizeattheoutsetthatthreefundamentalconsiderationsunderliethecomplexpatternsoflocationofeconomicactivityandmostofthemajorproblemsofregionaleconomics.

Thefirstofthese"foundationstones"appearsinthesimplisticexplanationsofthelocationofindustriesandcitiesthatcanstillbefoundinold-stylegeographybooks.WineandmoviesaremadeinCaliforniabecausethereisplentyofsunshinethere;NewYorkandNewOrleansaregreatportcitiesbecauseeachhasanaturalwater-levelroutetotheinteriorofthecountry;easilydevelopablewaterpowersiteslocatedtheearlymilltownsofNewEngland;andsoon.Inotherwords,theunequaldistributionofclimate,minerals,soil,topography,andmostothernaturalfeatureshelpstoexplainthelocationofmanykindsofeconomicactivity.Abitmoregenerallyandinthemorepreciseterminologyofeconomictheory,wecanidentifythecompleteorpartialimmobilityoflandandotherproductivefactorsasoneessentialpartofanyexplanationofwhatiswhere.Suchimmobilityliesattheheartofthecomparativeadvantagethatvariousregionsenjoyforspecializationinproductionandtrade.

Thisis,however,bynomeansanadequateexplanation.Oneofthepioneersofregionaleconomics,AugustL?sch,sethimselfthequestionofwhatkindoflocationpatternsmightlogicallybeexpectedtoappearinanimaginaryworldinwhichallnaturalresourcedifferentialswereassumedaway,thatis,inauniformlyendowedflatplain.

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Insuchasituation,onemightconceivablyexpect(1)concentrationofallactivitiesatonespot,(2)uniformdispersionofallactivitiesovertheentirearea(thatis,perfecthomogeneity),or(3)nosystematicpatternatall,butarandomscatterofactivities.Whatdoesactuallyappearasthelogicaloutcomeisnoneofthese,butanelaborateandinterestingregularpatternsomewhatakintovariouscrystalstructuresandshowingsomerecognizablesimilaritytoreal-worldpatternsofdistributionofcitiesandtowns.Weshallhavealookatthispatternin

Chapter8

.WhattheChristaller-L?schtheoreticalexercisesdemonstratedwasthatfactorsotherthannatural-resourcelocationplayanimportantpartinexplainingthespatialpatternofactivities.

Indevelopinghisabstractmodel,L?schassumedjusttwoeconomicconstraintsdetermininglocation:(1)economiesofspatialconcentrationand(2)transportcosts.Thesearethesecondandthirdessentialfoundationstones.

Economistshavelongbeenawareoftheimportanceofeconomiesofscale,particularlysincethedaysofAdamSmith,andhaveanalyzedthemlargelyintermsofimperfectdivisibilityofproductionfactorsandothergoodsandservices.Theeconomiesofspatialconcentrationintheirturncan,asweshallseein

Chapter5

andelsewhere,betracedmainlytoeconomiesofscaleinspecificindustries.

Finally,goodsandservicesarenotfreelyorinstantaneouslymobile:Transportandcommunicationcostsomethingineffortandtime.Thesecostslimittheextenttowhichadvantagesofnaturalendowmentoreconomiesofspatialconcentrationcanberealized.

Tosumup,anunderstandingofspatialandregionaleconomicproblemscanbebuiltonthreefactsoflife:(1)natural-resourceadvantages,(2)economiesofconcentration,and(3)costsoftransportandcommunication.Inmoretechnicallanguage,thesefoundationstonescanbeidentifiedas(1)imperfectfactormobility,(2)imperfectdivisibility,and(3)imperfectmobilityofgoodsandservices.

1.3REGIONALECONOMICPROBLEMSANDTHEPLANOFTHISBOOK

What,then,aretheactualproblemsinwhichanunderstandingofspatialeconomicscanbehelpful?Theyarise,asweshallsee,onseveraldifferentlevels.Someareprimarilymicroeconomic,involvingthespatialpreferences,decisions,andexperiencesofsuchunitsashouseholdsorbusinessfirms.Othersinvolvethebehavioroflargegroupsofpeople,wholeindustries,orsuchareasascitiesorregions.Togivesomeideaoftherangeofquestionsinvolvedandalsotheapproachthatthisbooktakesindevelopingaconceptualframeworktohandlethem,weshallfollowhereasequencecorrespondingtothesuccessivelaterchapters.

Thebusinessfirmis,ofcourse,mostdirectlyinterestedinwhatregionaleconomicsmayhavetosayaboutchoosingaprofitablelocationinrelationtogivenmarkets,sourcesofmaterials,labor,services,andotherrelevantlocationfactors.Anonbusinessunitsuchasahousehold,institution,orpublicfacilityfacesananalogousproblemoflocationchoice,thoughthespecificlocationfactorstobeconsideredmayberatherdifferentandlesssubjecttoevaluationintermsofpriceandprofit.Oursurveyofregionaleconomicsbeginsin

Chapter2

bytakingamicroeconomicviewpoint.Thatis,alllocations,conditions,andactivitiesotherthantheindividualunitinquestionwillbetakenasgiven:Theindividualunit'sproblemistodecidewhatlocationitprefers.

Theimportanceoftransportandcommunicationservicesindetermininglocations(oneofthethreefoundationstones)willbecomeevidentinChapter2.Therelationofdistancetothecostofthespatialmovementofgoodsandservices,however,isnotsimple.Itdependsonsuchfactorsasroutelayouts,scaleeconomiesinterminalandcarriageoperations,thelengthofthejourney,thecharacteristicsofthegoodsandservicestransferred,andthetechnicalcapabilitiesoftheavailabletransportandcommunicationmedia.

Chapter3

identifiesandexplainssuchrelationsandwillexploretheireffectsontheadvantagesofdifferentlocations.

In

Chapter4

,ananalysisofpricingdecisionsanddemandinaspatialcontextisdeveloped.Thisanalysisextendssomeprinciplesofeconomicsconcerningthetheoryofpricingandoutputdecisionstothespatialdimension.Asaresult,weshallbeabletoappreciatemorefullytherelationshipbetweenpricingpoliciesandthemarketareaofaseller.Weshallfindalsothatspaceprovidesyetanotherdimensionforcompetitionamongsellers.Further,thisanalysiswillserveasabasisforunderstandingthelocationpatternsofwholeindustries.Ifanindividualfirmorotherunithasanybutthemostmyopicoutlook,itwillwanttoknowsomethingaboutshiftsinsuchpatterns.Forexample,afirmproducingoil-drillingorrefineryequipmentshouldbeinterestedinthelocationalshiftsintheoilindustryandabusinessfirmenjoyingfavorableaccesstoamarketshouldwanttoknowwhetheritislikelythatmorecompetitionwillbecomingitsway.

WhilesomeoftheissuesdevelopedinChapter4concernfactorsthatcontributetothedispersionofsellerswithinanindustry,

Chapter5

recognizesthepowerfulforcesthatmaydrawsellerstogetherinspace.Fromananalysisofvarioustypesofeconomiesofspatialconcentrationandadescriptionofempiricalevidencebearingontheirsignificance,weshallfindthatthenatureofthisfoundationstoneoflocationdecisionscanhaveimportantconsequencesforlocalareasorregions.

Chapter6

introducesexplicitrecognitionofthefactthatactivitiesrequirespace.Space(ordistance,whichissimplyspaceinonedimension)playsaninterestinglydualroleinthelocationofactivities.Ontheonehand,distancerepresentscostandinconveniencewhenthereisaneedforaccess(forinstance,incommutingtoworkordeliveringaproducttothemarket),andtransportandcommunicationrepresentmoreorlesscostlywaysofsurmountingthehandicapstohumaninteractionimposedbydistance.Butatthesametime,everyhumanactivityrequiresspaceforitself.Inintensivelydevelopedareas,sheerelbowroomaswellastheamenitiesofprivacyarescarceandvaluable.Inthiscontext,spaceanddistanceappearasassetsratherthanasliabilities.

Chapter6treatscompetitionforspaceasafactorhelpingtodeterminelocationpatternsandindividualchoices.Thefocushereisstillmore"macro"thanthediscussionoflocationpatternsdevelopedinprecedingchapters,inthatitisconcernedwiththespatialorderingofdifferenttypesoflandusearoundsomespecialpoint—forexample,zonesofdifferentkindsofagriculturearoundamarketcenter.InChapter6,thelocationpatternsofmanyindustriesorotheractivitiesareconsideredasconstituentsoftheland-usepatternofanarea,likepiecesofajigsawpuzzle.Manyoftherealproblemswithwhichregionaleconomiesdealareinfactposedintermsoflanduse(Howisthissiteorareabestused?)ratherthanintermsoflocationperse(Whereisthisfirm,household,orindustrybestsituated?).Theinsightsdevelopedinthischapterarerelevant,then,notonlyfortheindividuallocatorsbutalsoforthoseowningland,operatingtransitorotherutilityservices,orotherwisehavingastakeinwhathappenstoagivenpieceofterritory.

Theland-useanalysisofChapter6servesalsoasabasisforunderstandingthespatialorganizationofeconomicactivitywithinurbanareas.Forthisreason,

Chapter7

employstheprinciplesofresourceallocationthatgovernlanduseandexposesthefundamentalspatialstructureofurbanareas.Considerationisgivenalsotothereasonsforandimplicationsofchangesinurbanspatialstructure.Thisanalysisprovidesaframeworkforunderstandingadiversearrayofproblemsfacedbycityplannersandcommunitydevelopersandredevelopers.

In

Chapter8

,thefocusisbroadenedoncemoreinordertounderstandpatternsofurbanizationwithinaregion:thespacing,sizes,andfunctionsofcities,andparticularlytherelationshipbetweensizeandfunction.Real-worldquestionsinvolvingthisso-calledcentral-placeanalysisinclude,forexample,trendsincity-sizedistributions.Isthecrossroadshamletorthesmalltownlosingitsfunctionsandbecomingobsolete,orisitsplaceinthespatialorderbecomingmoreimportant?Whatsizecityortownisthebestlocationforsomespecifickindofbusinessorpublicfacility?Whatservicesandfacilitiesareavailableonlyinmiddle-sizedandlargercities,oronlyinthelargestmetropolitancenters?Intheplanneddevelopedorunderdevelopedregion,whatsizedistributionandlocationpatternofcitieswouldbemostappropriate?Anyprinciplesorinsightsthatcanhelpanswersuchquestionsorexposethenatureoftheircomplexityareobviouslyusefultoawiderangeofindividuals.

Chapter9

dealswithregionsofvarioustypesintermsoftheirstructureandfunctions.Inparticular,itconcernstheinternaleconomictiesor"linkages"amongactivitiesandintereststhatgivearegionorganicentityandmakeitausefulunitfordescription,analysis,administration,planning,andpolicy.

AfteranunderstandingofthenatureofregionsisdevelopedinChapter9,ourattentionturnstogrowthandchangeandtotheusefulnessanddesirabilityoflocationalchanges,asdistinctfromrationalizationsofobservedbehaviororpatterns.

Chapter10

dealsspecificallywithpeopleandtheirpersonallocationalpreferences;itisanecessarypreludetotheconsiderationofregionalandurbandevelopmentandpolicythatfollows.Migrationisthecentraltopic,sincepeoplemostclearlyexpresstheirlocationallikesanddislikesbymoving.Someinsightintothefactorsthatdeterminewhomoveswhere,andwhen,isneededbyanyonetryingtoforeseepopulationchanges(suchasregionalandcommunityplannersanddevelopers,utilitycompanies,andthelike).Thisinsightisevenmoreimportantinconnectionwithframingpublicpoliciesaimedatrelievingregionalorlocalpovertyandunemployment.

Chapters11

and

12

,dealingwithregionaldevelopmentandrelatedpolicyissues,areconcernedwittheregionasawholeplusastillhigherlevelofconcern;namely,thenationalinterestinthewelfareandgrowthofthenation'sconstituentregions.Chapter11,buildingontheconceptsofregionalstructuredevelopedinChapter9,concentratesontheprocessandcausesofregionalgrowthandchange.Viewingtheregionasaliveorganism,wedevelopabasicunderstandingofitsanatomyandphysiology.Chapter12proposesappropriateobjectivesforregionaldevelopment(involving,thatis,thedefinitionofregionaleconomic"health").Itanalyzestheeconomicillstowhichregionsareheir(pathology)andventurestoassessthemeritsofvariouskindsofpolicytohelpdistressedregions(therapeutics).

Throughoutthistext,evidenceofthespecialsignificanceofthe"urban"regionwillbefound.Discussionsofeconomiesassociatedwiththespatialconcentrationofactivity,landuse,andregionaldevelopmentandpolicyhaveimportanturbandimensions.Itisfitting,the,thatthelastchapterofthetext,

Chapter13

,focusesonsomemajorpresent-dayurbanproblemsandpossiblecurativeorpalliativemeasures.Attentionisgiventofourareasofconcern(downtownblight,poverty,urbantransport,andurbanfiscaldistress)inwhichspatialeconomicrelationshipsareparticularlyimportantandtherelevanceofourspecializedapproachisthereforestrong.

Itishopedthatthisdiscussionhasservedtocreateanawarenessofsomebasicfactorsgoverningthespatialdistributionofeconomicactivityandtheirimportanceinalargersetting.Thecourseofstudyonwhichweareabouttoembarkwillintroduceaframeworkforunderstandingthemechanismsbywhichthesefactorshaveeffect.Itholdsouttheprospectofdevelopingperspectiveonassociatedproblemsandabasisfortheanalysisofthoseproblemsandtheirconsequences.

SELECTEDREADINGS

MartinBeckmann,LocationTheory(NewYork:RandomHouse,1968).

EdgarM.Hoover,"SpatialEconomics:PartialEquilibriumApproach,"inEncyclopediaoftheSocialSciences(NewYork:Macmillan,1968).

WalterIsard,LocationandSpace-Economy(Cambridge,Mass.:TheMITPress,1956).

AugustL?sch,Dier?umlicheOrdnungderWirtschaft(Jena:GustavFischer,1940;2nded.,1944);W.H.Woglom(tr.),TheEconomicsofLocation(NewHaven,Conn.:YaleUniversityPress,1954).

LeonMoses,"SpatialEconomics:GeneralEquilibriumApproach,"inEncyclopediaoftheSocialSciences(NewYork:Macmillan,1968).

HughO.Nourse,RegionalEconomics(NewYork:McGraw-Hill,1968).

HarryW.Richardson,"TheStateofRegionalEconomics,"InternationalRegionalScienceReview,3,1(Fall1978),1-48.

HarryW.Richardson,RegionalEconomics(Urbana,Ill.:UniversityofIllinoisPress,1979).

ENDNOTES

1.ApointofdepartureforL?sch'sworkwasthatofapredecessor,thegeographerWalterChristaller,whosestudiesweremoreempiricallyoriented.

AnIntroductiontoRegionalEconomics

EdgarM.HooverandFrankGiarratani

2IndividualLocationDecisions

2.1LEVELSOFANALYSISANDLOCATIONUNITS

Laterinthisbookweshallcometogripswithsomemajorquestionsoflocationalandregionalmacroeconomics;ourconcernwillbewithsuchlargeandcomplexentitiesasneighborhoods,occupationallaborgroups,cities,industries,andregions.Webeginhere,however,onamicroeconomiclevelbyexaminingthebehavioroftheindividualcomponentsthatmakeupthoselargergroups.Theseindividualunitswillbereferredtoaslocationunits.

Justhowmicroscopicaviewonetakesisamatterofchoice.Withintheeconomicsystemtherearemajorproducingsectors,suchasmanufacturing;withinthemanufacturingsectorarevariousindustries.Anindustryincludesmanyfirms;afirmmayoperatemanydifferentplants,warehouses,andotherestablishments.Withinamanufacturingestablishmenttheremaybeseveralbuildingslocatedinsomemoreorlessrationalrelationtooneanother.Variousdepartmentsmayoccupylocationswithinonebuilding;withinonedepartmentthereisalocationpatternofindividualoperationsandpiecesofequipment,suchaspunchpresses,desks,orwastebaskets.

Ateachofthelevelsindicated,thespatialdispositionoftheunitsinquestionmustbeconsidered:industries,plants,buildings,departments,wastebaskets,orwhatever.Althoughdeterminationsofactualordesirablelocationsatdifferentlevelssharesomeelements,

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therearesubstantialdifferencesintheprinciplesinvolvedandthemethodsused.Thus,itisnecessarytospecifytheleveltowhichoneisreferring.

Weshallstartwithamicroscopicbutnotultramicroscopicview,ignoringforthemostpart(despitetheirenticementsinthewayofimmediacy,practicality,andamenabilitytosomehighlysophisticatedlinesofspatialanalysis)suchissuesasthedispositionofdepartmentsorequipmentwithinabusinessestablishmentorskiliftsonamountainsideorelectricoutletsinahouse.Oursmallestlocationunitswillbedefinedattheleveloftheindividualdwellingunit,thefarm,thefactory,thestore,orotherbusinessestablishment,andsoon.Theseunitsareofthreebroadtypes:residential,business,andpublic.Somelocationunitscanmakeindependentchoicesandaretheirown"decisionunits";others(suchasbranchofficesorchainstoreoutlets)arelocatedbyexternaldecision.

Manyindividualpersonsrepresentseparateresidentialunitsbyvirtueoftheirstatusasself-supportingunmarriedadults;butaconsiderablylargernumberdonot.IntheUnitedStatesin1980,onlyaboutonepersonintwelvelivedalone.About44percentofthepopulationwerelivingincouples(mostlymarried);nearly30percentweredependentchildrenundereighteen;andasubstantialfractionoftheremainderwereaged,invalid,orotherwisedependentmembersoffamilyhouseholds,orwerelocationallyconstrainedasmembersofthearmedforces,inmatesofinstitutions,membersofmonasticorders,andsoon.Forthesetypesofpeople,theresidentiallocationunitisagroupofpersons.

Inthebusinessworld,thefirmistheunitthatmakeslocationaldecisions(thelocationdecisionunit),butthe"establishment"(plant,store,bankbranch,motel,theater,warehouse,andthelike)istheunitthatislocated.Further,thegreatmajorityofsuchestablishmentsaretheonlyonesthattheirfirmsoperate.Ingeneral,abusinesslocationunitdefinedinthiswayhasaspecificsite;butinsomecases,theunit'sactualoperationscancoveraconsiderableandevenafluctuatingarea.Thus,constructionandservicebusinesseshavefixedheadquarters,buttheirworkersrangesometimesfarafieldinthecourseoftheirduties;andthe"location"ofatransportationcompanyisanetworkofroutesratherthanapoint.

Nonprofit,institutional,social,andpublic-serviceunitslikewisehavetobelocated.Thoughthedecisionmaybemadebyapersonorofficeinchargeofunitsinmanylocations,therelevantlocationalunitforourpurposesisthesmallestonethatcanbeconsideredbyitself:forexample,achurch,abranchpostoffice,acollegecampus,apolicestation,amunicipalgarage,orafraternityhouse.

2.2OBJECTIVESANDPROCEDURESFORLOCATIONCHOICE

Letusnowtakealocationalunit—asingle-establishmentbusinessfirm,asastartingpoint—andinquireintoitslocationpreferences.First,whatconstitutesa"good"location?Subjecttosomeimportantqualificationstobenotedlater,wecanspecifyprofits,inthesenseofrateofreturnontheowners'investmentoftheircapitalandeffort,asameasureofdesirabilityofalternativesites.Wemustrecognize,however,thatthissignifiesnotjustnextweek'sprofitsbuttheexpectedreturnoveraconsiderablefutureperiod,sincealocationchoicerepresentsacommitmenttoasitewithcostsandrisksinvolvedineverychangeoflocation.Thus,theprospectivegrowthanddependabilityofreturnsarealwaysrelevantaspectsoftheevaluation.

Becauseitcostssomethingtomoveoreventoconsidermoving,businesslocationsdisplayagooddealofinertia—evenifsomeotherlocationpromisesahigherreturn,theapparentadvantagemaydisappearassoonastherelocationcostsareconsidered.Actualdecisionstoadoptanewlocation,then,arelikelytooccurmainlyatcertainjuncturesinthelifeofafirm.Onesuchjunctureis,ofcourse,birth—whentheinitiallocationmustbedetermined.Butatsomelatertime,thegrowthofabusinessmaycallforamajorexpansionofcapacity,oranewprocessorlineofoutputmaybeintroduced,ortheremaybeamajorshiftinthelocationofcustomersorsuppliers,oramajorchangeintransportrates.Theimportantpointisthatachangeinlocationisrarelyjustthat;itisnormallyassociatedwithachangeinscaleofoperations,productionprocesses,compositionofoutput,markets,sourcesofsupply,transportrequirements,orperhapsacombinationofmanysuchchanges.

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Itisquiteclearthatmakingevenareasonablyadequateevaluationoftherelativeadvantagesofallpossiblealternativelocationsisataskbeyondtheresourcesofmostsmallandmedium-sizedbusinessfirms.Suchanevaluationisundertaken,asarule,onlyunderseverepressureofcircumstances(astrongpresumptionthatsomethingiswrongwiththepresentlocation),andvariousshortcutsandexternalaidsareused.Perhapstheclosestapproachtocontinuousscientificappraisalofsiteadvantagesistobefoundinsomeofthelargeretailchains.Profitmarginsarethinandcompetitionintense;thefinancialandresearchresourcesofthefirmareverylargerelativetothesizeoftheindividualstore;andthestoresthemselvesarerelativelystandardized,builtonleasedland,andeasytomove.Alltheseconditionsfavoracontinuousclosescrutinyofnewsiteopportunitiesandtheapplicationofsophisticatedtechniquestoevaluatelocations.

Stillmoreelaborateanalysisisusedasabasisfornewlocationorrelocationdecisionsbylargecorporationsoperatinggiantestablishments,suchassteelmills.Thesedecisions,however,arefewandfarbetween,andinvolveingeneralawholeseriesofreallocationsandadjustmentsofactivitiesatotherfacilitiesofthesamefirm.

Withinthelimitationsmentionedabovewemightcharacterizebusinessfirmsassea