SPATIAL COST CURVES AND ADJUSTMENT OF THE FIRM

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.