Losch Theory YouTube Lecture Handouts for Andhra Pradesh PSC

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Watch Video Lecture on YouTube: August Losch Economic Location Theory - 2 Key Aspects

August Losch Economic Location Theory - 2 Key Aspects

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Losch’S Theory

Profit Maximization

Weight gaining Industries Mkt

Oriented – Bakery

(Weber) Least Cost ApproachTraditional Heavy Industries

Iron & Steel

Image of Basic Idea Is DEMAND For Losch

Image of Basic Idea is DEMAND for Losch

Basic Idea is DEMAND

Customers at Boundary – in Different – Can Go Anywhere

Losch theory at the boundary

Image of Customers at Boundary for Losch


  • Assumptions

  • Each product has different market based on importance.

  • Isotropic surface.

  • Even purchasing power.

  • Constant supply of goods and services.

  • People live in isolated evenly spaced farmsteads.

  • Demand decreases with increase in transportation cost.

  • Entrepreneurs - aim of profit maximization.

  • Pure competition with no economic discrimination.

  • Each market has monopolistic competition.

  • He ignored transport cost, labour cost, and agglomeration cost.

  • Minimize movement of consumers through space.

  • New production plants could enter market if profitable.

Demand Cones

Image of Demand Cones For Losch

Image of Demand Cones for Losch

K-Values under Losch

Image of K-Values Under Losch

Image of K-Values under Losch

Why Hexagons?

Image of Hexagons For Losch

Image of Hexagons for Losch

Profit Maximization Stage

  • Factories concentrate for profit

  • Mal-distribution – Shrinkage of area

  • Circular pattern – decides future of industry

Image of Profit Maximization Stage For Losch

Image of Profit Maximization Stage for Losch

New Market Boundaries

Image of New Market Boundaries For Losch

Image of New Market Boundaries for Losch


  • Starts from bottom of system

  • Hexagon – best for Mkt area

  • Nest of hexagons

  • Superimposition of K Values

  • Hexagons are rotated 30° with common center

  • Rich & poor sectors arise (12)

  • To obtain maximum degree of spatial association of central places

Image of Nest of Hexagons For Losch

Image of Nest of Hexagons for Losch


  • Removes limiting constraints from Christaller’s model allowing more variation in threshold, sphere of influence, and K values.

  • Does not assume that settlement is based only on three aspects of marketing, transport, and administration but by combination of many.

  • Maximum purchases would be made locally.

  • Reduce total distance between production points allowing largest number of production locations to coincide.

  • Minimization of aggregate transportation costs.

  • Existence of specialized production centers.


  • Assumption of isotropic surface severely limits its direct applicability.

  • It is more complex and abstract.

  • Model overemphasis the demand.

  • Fails to account problems arising from locational interdependence of industrial plants.

Christaller vs Losch

Table of Christaller vs Losch for Losch
Table of Christaller vs Losch For Losch

Christaller’s Model

Losch’s Model

Assumes triangular patterns and hexagonal market areas

Used concept of range, threshold and hierarchy

Starts from top of hierarchy.

Starts from bottom of hierarchy & urbanizing region as combination of smaller centers.

Better explains urban system from Frontier (USA).

Better explains development of service in area of dense agricultural settlement (Europe).

Mainly concerned with retailing and services.

Increases scope by adding local manufacturing.

Is more applicable to planning.

Is theoretically more accurate.

Developed by: