ABSTRACT
So far, our location theory has focused exclusively on transportation costs. But clearly there are other cost factors that affect the firm’s location decision. In reality, any category of cost that varies over space must be taken into account in the firm’s location decision. In this chapter, we will address two such categories: the cost of labor and the cost of land (rent). We will also consider how spatially varying payments to the government (taxes) and from the government (subsidies) affect location.
