Location Theory

Location theory refers to a conceptual perspective widely used in economic geography during the 1950s and 1960s, primarily during the reign of the philosophy of logical positivism. Location theory exemplified geography as a spatial science, primarily concerned about abstract laws applicable under all circumstances.

Location theory in various forms shared a common focus on the centrality of models as bridges between the empirical world and the theoretical world of prediction and explanation. Models distill the essence of the world, revealing causal properties via simplification. A good model is simple enough to be understood by its users, representative enough to be used in a wide variety of circumstances, and complex enough to capture the essence of the phenomenon under investigation. Typically, models were developed, tested, and applied using quantitative methods. This approach to geography relied on a Cartesian view of space, generally in the form of an isotropic plain in which space was reduced to distance and spatial variations occur only through transport costs. Essentially, location theory reduced geography to a form of geometry, a view in which spatiality is manifested as surfaces, nodes, networks, hierarchies, and diffusion processes. In short, this presented a view of space devoid of social relations.

Location theory developed close ties to neoclassical economics, spatializing economic relations through the use of cost minimization, profit maximization, and utility maximization models. Often it began with the[Page 286] assumption, and reached the conclusion, that unfettered markets were Pareto optimal in nature. In some cases, location theory turned to cognitive psychology and behavioral geography to incorporate probabilistic models of behavior under uncertainty in studies of spatial cognition, decision theory, and suboptimality. This line of thought was central to the discipline of regional science, a hybrid of economic geography and spatial economics.

Although it became popular during the 1950s and 1960s, location theory drew on an older tradition of German economic geography that extended back to the early 19th century. For example, Johann Henreich Von Thünen (1783–1850), a wealthy Prussian landlord, bought a 1,146-acre estate at Mecklenburg in 1810 and compiled data for The Isolated State in 1821, the first model of land markets, which subsequently had important effects on studies of early land use. In 1909, Alfred Weber (1868–1958), younger brother of famed sociologist Max Weber, inspired the first industrial location theory. Weberian analysis centered on transportation costs, arguing that firms located where the sum of transporting inputs and outputs was minimized, leading them to be resource or market oriented. In 1933, Walter Christaller (1893–1969) wrote his enormously influential dissertation Central Places in Southern Germany, which founded central place theory, the conception of city systems in terms of a hierarchy of market areas distributing goods and services. This view of city systems posits them as retail centers (central places) that distribute goods and services to their surrounding hinterlands. Each good has a threshold (minimum market size) and a range (maximum distance consumers will travel to purchase it). A hierarchy of goods and services leads to a hierarchy of central places, with lower-order ones nested within the hinterlands of higher-order ones. Assuming an isotropic plain, a hexagonal network of market areas should emerge. Central place theory became the basis of most urban geography during the late 1950s and 1960s. Finally, August Losch (1906–1945) contributed to location theory with the publication of The Economics of Location in 1939.

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