Geography 2143A/B Lecture Notes - Lecture 2: Mercantilism, Economic Surplus, Location Theory
24 Sep 2021
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Theories and concepts: guiding paradigms of trade and location. In the beginning: the reasoning behind trade and the misconceptions. We instead buy them from other nations who can grow them at a lower cost: this notion of nations vying for an edge is examined in smith"s principle of absolute advantage. However, in terms of trade a nation should focus on what it excels at. Introduction of international trade can break up local monopolies: transference of technology through multinational corporations, which in turn can create additional job opportunities. The simplest model: location on a line (1 market, 1 source) If the material is universal, then processing will take place at the market. If the material is weight losing, the processing will locate at the material source to avoid transporting waste material. If the material is pure, processing may occur at the market, the material site, or any place in between. An intermediate location would entail an unnecessary additional handling cost.
