ABSTRACT
This chapter provides the comparative cost procedure for evaluating the economic feasibility of the location of any particular industry or service trade in a given region. It focuses on one type of optimizing behavior, namely cost minimization. A comparative cost study typically proceeds for any given industry on the basis of an established or anticipated pattern of markets and a given geographic distribution of raw materials and other productive factors used in the industry. The objective of the study is to determine in what region or regions the industry could achieve the lowest total cost of producing and delivering its product to the market. In general, service trade clusters form for the same reasons as do industries. Surrounding the comparative cost approach are a number of measures relating to industrial location and regional distributions — location quotients, coefficients of localization, localization curves, shift ratios, indexes of specialization, and many others.
