SUPPLY ARMS AND OPTIMAL SPATIAL STRUCTURE*

ABSTRACT. A multi-plant producer has sole access to a region, and each of the plants processes a raw material which is drawn from its own exclusive supply area. Under these conditions what spatial structure of production (in terms of plant scale, plant frequency, supply-area size and supply-area shape) will enable region-wide or multi-plant profit to be maximized? The form of this optimal structure is shown to vary with prevailing level of price, which is exogenously determined.