How would you explain the fact that market forces move/attract firms and population into some places (the cities)?
Topic 4_P5
Geographical factors are helpful for providing the understanding of where concentrations of people and firms (put differently: cities) are rather than why they exist and how they grow
the division of labour enhances labour productivity and gives rise to increasing returns to scale due to specialisation in particular tasks,
the economies of scale resulting from increasing specialisation may arise within the firm because of the use of specialised technologies which force a more relentless efficiency in production. Increasing returns provide, then, the driving force for agglomeration of the manufacturing activity, which is therefore concentrated in or around a unique place (mostly the city),
the grouping together of firms in one place allows them to benefit from economies of scale that also arise outside the firms,
firms are attracted because cities offer the economies of agglomeration in the form of a large home market, supplies of skilled labour and the presence of supplementary industries.
individuals are attracted as well! Why?
All of this triggers a self-reinforcing mechanism in which market forces favour a continued movement of factors and population into some places (the cities)
Location theory – factors that determine the firm decisions on location
Topic 4_P8
firms tend to locate near markets when the monetary weight of the final product exceeds the monetary weight of the inputs required to produce that product,
firms tend to locate near primary input sources when the monetary weight of raw materials is large relative to the weight of the final product,
firms may also weigh the relative production cost savings from particular locations with the increased transportation costs to minimize the total costs of production and transportation
Chia sẻ với bạn bè của bạn: |
