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Factors affecting location

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Some industries have strong reasons to locate in a particular region. (There will be significant external economies of scale) Others, on the other hand, do not. These are known as footloose industries. Modern high technology industries such as computer chip manufacturers are good examples.

In many cases there will be a trade-off between costs and gains. This means that each option has to be evaluated and quantitative decisions made. You may be able to set your business up, or expand it in a distant part of the world very cheaply, but then face a mountain of extra operational and distribution costs.