not only on objective facts of cost, but also on subjective considerations about potential markets. Consequently, two entrepreneurs may choose two different locations under exactly identical external conditions. The range of sites depends on the size of the possible profits. A factory may be established at a place where revenue is greatest rather than where cost is smallest. Losche also refined this concept. The plant may not be established at the place of largest sales, but where one of the sales’ components, such as quantity or price, prevails. Orientation to quantity reflects the number of buyers, whereas orientation to prices recognizes the importance of purchasing power. The former favors populous areas while the latter favors prosperous areas. Losche assumed a single hexagonal market area surrounding each center of production. The optimum location changes with each price change, which directly affects demand. Thus, when variability in market demand is considered, as Losche indicated, the least-cost theory — which is based on cost of production — loses validity. It then becomes meaningless to attempt to locate at the point of lowest cost. As a result, there must be an attempt to find the largest market area that will then provide the greatest profit. This is the central theme of the maximum profit theory.1 If Losche’s theory is correct, the SPS system may not attract industry to its immediate vicinity since preliminary siting studies indicate the rectennae are to be located in sparsely populated areas where markets are limited. This thought will be explored later. 2.1.3 Theories of Locational Interdependence To overcome some of the weaknesses in traditional least cost theory, the "locational interdependence" or "market area" school of thought came to be developed. This school includes the works of economists who, like Losche, are interested in the theory of imperfect or monopolistic competition. They include: Hotelling,9 Chamberlin,10 Lerner and Singer,11 Smithies,12 and Ackley.13 This approach generally assumes that all firms have identical production costs and sell to a spatially distributed market. The delivered price to consumers varies with the cost of overcoming distance from the factory. Each seller, in choosing his location, seeks to control the largest possible market area, the positions and extent of which will be influenced by consumer behavior and by the locational decisions of other firms. The manufacturer exercises monopoly control over that section of the market that he can supply at a lower price than his competitors. The spatial pattern of plant location and market areas is thus
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