ABSTRACT
So far, we have treated the firm as if it had two separate types of decision to make in order to maximize its profit. The first type, which includes decisions about how to combine inputs to produce an optimal level of output, depends on the production technology. The second type is the location decision, which depends on the structure of transportation costs. In this chapter, we explore some interrelationships between these two types of decisions. More specifically, we consider how the production technology affects the location decision.
