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August Losch Economic Location Theory - 2 Key Aspects
Losch՚s Theory
Profit Maximization
Weight gaining Industries Mkt
Oriented – Bakery
(Weber) Least Cost Approach
Traditional Heavy Industries
Iron & Steel
Basic Idea is DEMAND
Customers at Boundary – in Different – Can Go Anywhere
Assumptions
- 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
K-Values under Losch
Why Hexagons?
Profit Maximization Stage
- Factories concentrate for profit
- Mal-distribution – Shrinkage of area
- Circular pattern – decides future of industry
New Market Boundaries
Development
- 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
Merits
- 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.
Demerits
- 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
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. |
✍ Manishika