Transport rates structure,optimum location,and theory of production: Reexamination

The two-stage approach consistently to present a generalized location theory of the firm in linear space is employed. It is shown that the second-order sufficient condition for the profit-maximizing and/or cost-minimizing location problem requires that transport rates increase with distance. In the process, it is demonstrated that this approach provides a compact way to analyze the location and production decisions separately and to avoid the errors made by Mathur and others.