The spatial cost curve is examined for the case of an industrial firm
that utilizes a dispersed raw-material input. The spatial components o
f this curve include the cost of assembling the raw material and the c
ost of delivering the finished good, and each level of output on this
curve refers to the size and shape of the supply area drawn upon. A di
stinction is made between the average and marginal versions of the spa
tial cost curve and also between its long-run and short-run characteri
stics. The nature of equilibrium under conditions of free entry is exa
mined, along with the manner in which each firm adjusts to a disturban
ce of this equilibrium.