LOCATION,THEORY OF PRODUCTION,AND VARIABLE TRANSPORTATION RATES*

ABSTRACT. The question of what conditions insure independence between location and output decisions is investigated within the context of triangle space. Assuming that transportation rates vary with quantity and distance, it is shown that this independence is insured if the production function generates a linear expansion path and the following are all constant: transportation rate elasticities with respect to distance and quantity, and the price elasticity of demand for inputs.