firm location

firm location

see INDUSTRIAL LOCATION.

firm location

the area where a firm chooses to locate its business. In principle, a profit-maximizing firm will locate where its production and distribution costs are minimized relative to revenues earned. Often firms are faced with competing pulls of nearness to their market (to reduce product distribution costs) and nearness to their raw material supplies (to reduce materials transport costs), and must seek to balance these costs. Some firms have little choice in this regard, service companies being forced to locate near customers, and mineral extraction companies having to locate near materials’ sources. Many firms are relatively footloose, though, and are free to locate anywhere, influenced by the general attractiveness of an area, the quality of its transport, communications and education infrastructure, and the skills and reputation of its workforce, etc. See INDUSTRIAL LOCATION, LOCATION OF INDUSTRY, REGIONAL POLICY.