Demand,location, and the theory of production

This paper presents a profit-maximizing location model to investigate the impact of demand on the optimum location decision of a firm in the Weberian triangle. It will be shown that:(1) When the distance of the firm's location from the product market is held constant, the optimum location for the firm would be independent of the demand function if and only if the expansion path in input space is linear through the origin as demand varies;(2) When the distance of the firm's location from the product market is a decision variable, the optimum location for the firm would be independent of the demand function if and only if the production function is linearly homogeneous.I am grateful to Professor Bob Logan for helpful discussions, and especially Professor T.R. Lakshmanan for very valuable suggestions and comments. This work was partially supported by a 1987 Summer grant from the School of Management, University of Alaska Fairbanks