Johann Heinrich von Thünen



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    Join date : 2010-09-22

    Johann Heinrich von Thünen

    Post by kosovohp on Sat Oct 30, 2010 5:40 am

    Spatial economics deal with distance and area, and how these may affect a market through transportation costs and geographical limitations. The development of spatial economics is usually ascribed to German economist Johann Heinrich von Thünen; however, Cantillon addressed spatial economics nearly a century earlier.[88] Cantillon integrated his advancements in spatial economic theory into his microeconomic analysis of the market, describing how transportation costs influence the location of factories, markets and population centers—that is, individuals strive to lower transportation costs.[89] Conclusions on spatial economics were derived from three premises: cost of raw materials of equal quality will always be higher near the capital, due to transportation costs; transportation costs vary on transportation type (for example, water transportation was considered cheaper than land-based transportation); and larger goods that are more difficult to transport will always be cheaper closer to their area of production.[90] For example, Cantillon believed markets were designed as they were in order to decrease costs to both merchants and villagers in terms of time and transportation.[91] Similarly, Cantillon posited that the locations of cities were the result in large part of the wealth of inhabiting property owners and their ability to afford transportation costs—wealthier property owners tended to live farther from their property, because they could afford the transportation costs.[92] In Essai, spatial economic theory was used to derive why markets occupied the geographical area they did and why costs varied across different markets.[93]

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