The location theory of firm revisited impacts of rising energy prices

The impact of rising energy prices on the locational pattern of industries is analyzed by a simple two-firm straight line location model. The concavity of average cost function of final consumer's good with respect to locational variables is proved for the case of linear homogeneous Cobb- Douglas production functions and this leads to the possible three cases of end-point location. The rise in energy prices induces ‘double location at the market’ or ‘double location at the port’ instead of separate location of two industries, i.e., intermediate good industry and consumer's good industry.