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A NOTE ON TRANSPORTATION RATES AND LOCATION OF THE FIRM IN A TWO‐DIMENSION, n ‐INPUT SPACE *
Author(s) -
Olson Dennis O.,
Shieh YeungNan
Publication year - 1990
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1990.tb00110.x
Subject(s) - homothetic transformation , dimension (graph theory) , constant (computer programming) , space (punctuation) , homogeneous , marginal cost , economics , production (economics) , mathematical economics , econometrics , function (biology) , independence (probability theory) , mathematics , mathematical optimization , microeconomics , statistics , computer science , combinatorics , geometry , evolutionary biology , biology , programming language , operating system
This paper examines the theoretical implications of quantity‐discounted transportation rates on the optimum location decision of the firm. It shows that the linearly homogeneous or homothetic production function is not a sufficient condition for the independence between the optimum location and the output level, unless (i) the elasticities of transportation rates with respect to quantity shipped are constant and identical, and (ii) the ratios of marginal products 60 the marginal transportation costs are equal for each input.