The production-location problem revisited

This paper reconsiders the production-location problem (PLP) initiated by M oses. The PLP is extended to allow for the geographical substitution betwee n input sources, which is likely to occur in an integrated market. An algor ithm is then proposed to solve this problem. Finally, using numerical examp les, it is shown that small variations in the elasticity of substitution of the production function may lead to substantial jumps in the optimal firm location.