The production-location problem revisited

Dominique Peeters and Jacques Thisse

Papers in Regional Science, 2000, vol. 79, issue 2, 221-231

Abstract: This paper reconsiders the production-location problem (PLP) initiated by Moses. The PLP is extended to allow for the geographical substitution between input sources, which is likely to occur in an integrated market. An algorithm is then proposed to solve this problem. Finally, using numerical examples, it is shown that small variations in the elasticity of substitution of the production function may lead to substantial jumps in the optimal firm location.

Date: 2000-05-18
Note: Received: 2 December 1997
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