Geography Reference
In-Depth Information
$50
$100
$20
$80
M
5
M
3
P
K*
L
N
$100
$80
$50
$20
S
1
S
2
S
4
$20
Figure 3.9
New suppliers and new markets
than for any other location. Location
L
has therefore been determined
as the new optimum location with respect to
S
1
,
S
2
, and
M
3
. However,
in moving from
K
* to
L
, it may be that alternative suppliers of identical
inputs now become available, which previously were not realistic supply
options. For example, the input supply location
S
4
may be able to supply
exactly the same steel input as
S
1
but from a location whose distance from
S
4
to
L
, which we denote as
d
4
, is now much closer to the firm than the
distance
d
1
from
S
1
to
L
. Assuming the delivered price at location
L
of the
steel input produced at
S
4
is less than that of the input produced at
S
1
, that
is, (
p
4
1
t
4
d
4
),(
p
1
1
t
1
d
1
), the firm will be willing to substitute input supplier
S
4
for
S
1
. This will produce a new Weber location-production problem,
with the points
S
4
,
S
2
, and
M
3
as the (triangular) spatial reference points.
This change in input suppliers itself changes the geography of the input-
output linkages of the firm and obviously also implies that a new Weber
optimum can be determined which must be different to both
L
and also
K
*. For example, we can imagine that with the points
S
4
,
S
2
, and
M
3
as
the spatial reference points, the new Weber optimum for the automobile
manufacturing firm is found to be at
N
. However, at point
N
, it also now
