second factor that Weber considered vital in the location of manufacturing. The basis of Weber’s law of labor orientation is related to the idea that every point of lower labor costs constitutes a center of attraction that tends to draw industry from the point of minimal transport cost. In Weberian theory, besides the costs of transportation and labor that affect the regional location of industry, there are other factors, known as agglomeration factors, that contribute to the local distribution of industry. Weber defines an agglomeration factor as an ’’advantage” in production or marketing costs at a specific place. In contrast, a deglomerative factor is one that lowers production costs because of the decentralization of production. Edgar M. Hoover has built upon these contributions to least cost location theory.2 His main contribution lies not in theoretical originality, but in his penetrating discussions of the influence of Weberian locational factors. He stresses the fact that the cost of transferring outputs does not increase proportionately with distance. Where Weber’s analysis often indicated the optimum location to be between the points of supply and demand, Hoover’s accounting for terminal (or transfer) costs explained why industries are often found at the point of supply or demand. Hoover’s analysis of the agglomerating and deglomerating forces is also much more penetrating than Weber’s. Included in agglomeration are such advantages as better transfer services, a broader, more flexible labor market, more advanced banking facilities, better police protection, and lower insurance costs and utility rates. In addition, by agglomerating and localizing, Hoover postulates that firms specialize to a greater degree. Thus, certain operations and services that a plant in a less industrialized area would have to do for itself can be economically contracted out as the industrial infrastructure of an area develops. Least cost analysis and agglomeration characteristics are important concepts to be considered in the socioeconomic assessment of SPS. The SPS system could provide cheap and/or highly dependable electric power as an incentive for relocation. This possibility will be explored later in this white paper. 2.1.2 Maximum Profit Theory August Losche developed the maximum profit theory of industrial location. This theory is based on conditions of monopolistic competition, as advocated by Weber’s least cost theory.1* The profit maximizing theory of industrial location recognizes that the site of an industrial enterprise rests
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