TRANSPORTATION RATES AND LOCATION OF THE FIRM: A COMPARATIVE STATIC ANALYSIS*

ABSTRACT This paper examines the role of the structure of transportation rates in the Weber-Moses triangle model. It shows that, in Zeigler's analysis, the appearance of the price elasticities of demand for inputs actually vanish by a simple application of the envelope theorem. Applying comparative statics analysis, we show when transportation rates are a function of quantity and distance, the assumptions that the production function is homogeneous of degree one and the transportation rates elasticities with respect to quantity and distance are constant are not sufficient to insure that the optimum location is independent of the level of output. This result is significantly different from that obtained by either Miller and Jensen or Zeigler.     

Book Notes

Race Mathews, David Bennett — a Memoir, Melbourne, Australian Fabian Society (Pamphlet 44), 1985, pp. v + 59. $3.00 (paper)

S. Graubard (ed.), Australia: the Daedalus Symposium, Sydney, Angus & Robertson, 1985, pp.441. $9.95 (paper)

Senate Standing Committee on Constitutional and Legal Affairs, A Bill of Rights for Australia? An Exposure Report, Canberra, AGPS, 1985, pp.128. $7.60 (paper)

Dean Jaensch, An Introduction to Australian Politics, 2nd edition, Melbourne, Longman Cheshire, 1984, pp.318. $11.95 (paper)     

REVIEW

Society and the Dance: The Social Anthropology of Process and Performance. Edited by Paul Spencer. Cambridge: Cambridge University Press. 1985. Pp. x + 214. Price: $A22.00 (paperback), $A66.50 (hardback).     

TOTAL FACTOR PRODUCTIVITY GROWTH IN MANUFACTURING FURTHER EVIDENCE FROM THE STATES*

In this paper, we first develop a measure of total factor productivity (TFP) growth and summarize a source-of-growth analysis for the manufacturing sector of 48 states. As have others, we find little association between TFP growth differentials and output growth differentials for census regions. At the staterather than the regional level, however, we find a positive association between TFP growth and output growth. We use cross-sectional data to estimate the determinants of the variation in TFP growth. Two results emerge that are important for regional policy and for understanding national productivity trends. First, state investments in education and in transportation infrastructure may affect TFP growth. Second, energy price increases in the early 1970s had no differential effects on productivity growth across states. We also explore the determinants of manufacturing output growth and find that TFP growth, demand growth, wage growth, wage levels, and state corporate income tax rates are significant.