2 INDUSTRIAL LOCATION A key socioeconomic effect of the SPS system is the likelihood of industry to locate near the rectennae. This section reviews pertinent industrial location theories, factors affecting industrial location, and approaches for locational analysis. The reason for examining the literature on industrial location analysis is to gain understanding about how industry may be redistributed based on the availability and cost of electricity around rectennae sites. This understanding is critical to estimating changes in regional as well as local employment and population levels that may occur subsequent to SPS deployment. 2.1 THEORY This survey of economists* contributions to industrial location theory is a highly selective summary of important theories. We will summarize five generally recognized categories of industrial location theory. These are: least cost theory, maximum profit theory, theories of locational interdependence, integration of least cost and locational interdependence, and spatial general equilibrium theory.1 A brief discussion of each of these categories is a necessary prelude to choosing a method of analysis for assessing industrial and demographic location around an SPS rectenna site. Recent contributions to industrial location theory will be summarized separately. 2.1.1 Least Cost Theory Johann H. von Thunen was among the earliest economists interested in locating theory.1 He was concerned with the optimum location for agricultural crops in relation to a city. Although this theory was formulated to determine the least cost areas for agricultural crops, it provided a theoretical framework for later industrial location theory by utilizing the two variables of land rents and transportation costs. Alfred Weber developed a more comprehensive least cost theory many years later.1 Weber postulated that if weight and distance are the only determining factors, transportation costs will attract industrial production to those places where the fewest ton-miles originate during the entire process of production and distribution because transportation costs will be lowest at those points. Labor costs are the
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