ABSTRACT
We will now turn to a very straightforward question-the location of a particular facility, in which a firm will invest for a specific productive activity. We will approach this question in a normative sense, making assumptions about the goals of the firm. In this chapter, the goal is assumed to be minimizing the cost of operating the facility and selling the product. In Chapter 3, we will assume the related but distinct goals of maximizing the amount of the product sold and of maximizing the profit from the fixed investment. Governmentowned and -operated facilities may have yet other goals: to ensure that every citizen is within 100 miles of a particular type of government facility, to maximize interaction among government facilities, etc. Regardless of the goal, the firm or other enterprise is concerned with the investment and with its location only as a means toward that goal. Our question: how can the location of the investment affect the realization of the goal?
