Weber’s Model of Industrial Location

Weber’s model is based on several simplifying assumptions. He proposed an “Isolated State” with a flat relief, a uniform transport system extending equally in all directions, a uniform climate, and a uniform cultural, political, and economic system. While the transport system was assumed to be evenly accessible, raw materials were not evenly distributed. Resources that are found everywhere are referred to as ubiquitous, while those found in specific places are localised. Localised raw materials can be further classified into gross materials, which lose weight during manufacturing, and pure materials, which do not lose weight. The model also assumed that markets have fixed sizes and locations, and that the mass and weight of raw materials, as well as the distances they must be transported, directly influence transport costs, which are expressed in tonnes per kilometre.

Labour was assumed to exist at fixed locations, with identical wages, equivalent skills, and no mobility. A large supply of labour was also assumed. Entrepreneurs were considered to have equal knowledge, and the market structure was assumed to reflect perfect competition—meaning there were no monopolies and no single manufacturer could influence prices or market behaviour.

A key concept in Weber’s model is the Material Index (MI), calculated as:

MI = Total weight of raw materials ÷ Total weight of distributed product

If the MI is greater than 1, the raw material is bulky and there is significant weight loss during manufacturing, making it more cost-effective to locate the industry close to the raw material source. If the MI is less than 1, manufacturing leads to weight gain in the product, so the industry should locate closer to the market. If the MI equals 1, the raw material is pure, meaning its weight remains unchanged during production. In this case, the industry could locate either near the raw material source, near the market, or anywhere in between. For example, if 6 tonnes of raw steel are required to produce 1 tonne of finished steel (MI = 6), the steel industry should locate close to the raw material source. In contrast, if 1 tonne of raw material produces 5 tonnes of beer (MI = 0.2), the industry should be market-oriented.

Weber’s Least-Cost Location (LCL) principle further explains site choice in relation to raw materials and the market. If two gross raw materials are used, the optimal site is equidistant from both sources, favouring proximity to raw materials because both lose weight during processing. If both raw materials are pure and gain weight during production, the industry should locate nearer the market. In mixed cases, such as when R2 is iron ore (gross) and R1 is coal (pure), the LCL shifts towards the source of the gross material.

The model also introduces the concepts of isotims—lines joining locations with equal transport costs for moving either raw materials or products—and isodapanes—lines joining locations with equal total transport costs (both raw materials and products). For example, if a location costs 2 t/km to move raw materials and 5 t/km to move products, the total cost is 7 t/km. Another site might cost 4 t/km for raw materials and 2 t/km for products, totalling 6 t/km, making it the cheaper option.

In addition to raw materials and transport costs, Weber identified labour costs and agglomeration economies as influential factors. Labour costs can justify moving away from the LCL if cheaper or more efficient labour is found elsewhere. The critical isodapane is the boundary where savings from reduced labour costs equal the additional transport costs. If cheaper labour exists within this zone, relocating would be profitable. Agglomeration economies occur when firms cluster together to reduce costs through linkages such as shared suppliers, infrastructure, and services. Conversely, deglomeration occurs when firms move away from a crowded site, often due to rising costs or congestion.

However, Weber’s model has been criticised for being overly simplistic, outdated, and applicable mainly to secondary (manufacturing) industries. It is limited by its unrealistic assumptions, such as immobile labour, uniform landscapes, and perfect competition. In reality, electricity is ubiquitous, labour is mobile, industrialists may not make purely rational decisions, and government policies often influence industrial location. Furthermore, the model neglects revenue considerations and does not account for the diversity of industrial development patterns in different countries.