TECHNOLOGICAL INSTITUTE OF THE PHILIPPINES

QUEZON CITY

AR 443A – PLANNING 3

ASSIGNMENT - FINALS

LOCATION THEORY
ALFRED WEBER
JOHANN VON THUNEN
WILLIAM ALONSO
DAVID RICARDO

SUBMITTED BY:

VEROSIL, ANNE NICOLE B.

AR42FC3 (T-TH 4:30-6:00 PM)

SUBMITTED TO:

AR. EDUARDO F. BOBER, JR.

WEBER’S INDUSTRIAL LOCATION THEORY

Alfred Weber, a German economomist, sociologist and theoretician that wrote

the Theory of the Location of Industries, built his theory on the “least cost
principle” to provide for the location of a manufacturing industry.

Created in 1909, Weber’s Industrial location theory claims that the total costs
will get influenced by the costs that came from the transportation of goods, as
well as the labour that was put into the process of bringing the said goods, and
finally by the agglomeration factor that’s within the place of economy and
trade.

This theory emphasizes that the demand for all products is uniform which
meant that the price for all products at all locations are uniform as well.

Transportation costs explained in this

theory are based on the weight of the
cargo and the distance travelled. The
transportation costs of raw materials and
the final product is kept in minimum

The theory is known for it’s triangular

diagram which is called the “Locational
triangle”. The location triangle shows the
most efficient location for the production of
goods that are dependent on the market’s
location with two sources of raw materials
which in turn produces a triangle.

Weber’s theory aimed to determine the

least-cost production location based on the
locations of the market and two raw
material sources, that were initially fixed,
by knowing the total costs of transporting
raw materials both sites to the production
site as well as the product from the
production site to the marketplace.
VON THUNEN’S LOCATION THEORY OF AGRICULTURAL LOCATION:

Johann Heinrich von Thünen, sometimes referred to as the “Father of

Location Theorists”, is a Prussian landowner, who introduced the first
version of the Agricultural location theory.

Von Thünen was the one who developed the first approach of treating spatial
economics, which is partially connected with David Ricardo’s Theory of Rent.

He also formulated the Thünen model which advocates the need for the
market or town to be accessible in order to create a complete system of
agricultural land use.

Transportation costs are only affected by the distance

traveled and the volume shipped.

Thunen also had another theory which is called the Isolated

City which consisted of:

1.) City

2.) Market

3.) Forest

4.) Grain

5.) Livestock Farming

These things are arranged according to the ease of their transportation to and from the City. The Market is
the one nearest to the City since it holds goods that are perishable and only has a limited life span. The
Forest comes next after the Market since the City is in need of wood or timber that only the Forest can
provide. Weber’s Industrial location theory also supports this hierarchy since wood is typically heavier
compared to other commodities, it would cost more when transported since it’s weight would only affect the
overall cost of the delivery to the City. Grains comes next and is still supported by Weber’s Industrial
location theory since it is lighter than other types of commodities, it would only mean that the transportation
cost will be lesser than other goods. Lastly, livestock farming comes last since animals can transport
themselves and can make the transportation cost lesser than usual.

This theory also explains that the nearer and accessible you are to a CBD or Central Business District, the
higher the pay or rent for the lot would become since the land inside or near the City would demand for a
higher rate of return.
WILLIAM ALONSO’S BID-RENT FUNCTION THEORY OF LAND USE:

In 1960 William Alonso completed his dissertation which extended the von Thünen model to urban
land uses.

His model gives land use, rent, intensity of land use, population and employment as a function of
distance to the Central Business District of the city as a solution of an economic equality.

The Thünen model required considerable modification to apply to residential, commercial and
industrial land use. In the von thünen model the bid-rent function declined as a result of the increased
transportation costs to transport the produce of one unit of land one additional unit of distance.

A preliminary rationalization of a bid-rent function for a household came out of the Chicago
Transportation Study. There the results indicated that households behaved as though they had a combined
rent and transportation budget that if transportation cost were higher, then the amount that they would pay
for rent is lower.

In this theory, it explains how inversely proportional the transportation cost is to the rent cost. It
states in the diagram that the more accessible the area is to the Central Business district is, the higher the
rent would be. However, it doesn’t necessarily mean that you should always be located near the Central
Business District since the rent is high, and if you only need a portion of land for housing, you can always
be located a little farther away from it.

This theory basically states that every land use has different types of rent gradients.
DAVID RICARDO ‘S RICARDIAN THEORY OF RENT:

David Ricardo, an English classical economist, first developed a

theory in 1817 to explain the origin and nature of economic rent.

Ricardo used the economic and rent to analyse a particular

question. In the Napoleonic wars (18.05-1815) there were large
rise in corn and land prices.

David Ricardo focused on the relation of profit, wages, price of the

commodities, rent and the production in his book Political Economy
and Taxation.

The profit of producing and selling the commodities have an

inversely proportional relationship to the wages of the people who
were part of the production. The profit may or may not increase or
decrease since it depends on the cost of the necessities in producing the afformentioned commodities.

The prices of the products will be dependent on the cost of its production and it’s price may fluctuate based
since the market always changes. With the fluctuation of the market price, the wages of the people
included in the production will also be affected.

When the cost to rent is too high this may lead to a higher prices of produced product, the wages of the
consumer may equal the cost of their necessity even with increase. This is why sometimes the cost to
import goods rether than produce it is much practicable.