This paper has attempted to clarify some weaknesses and flaws contained in Miller and Jensen's analysis. In particular, we have demonstrated that in Miller and Jensen's model, if the production function is homogeneous of degree one and the transport rate functions are independent of quantities shipped, it is impossible to have an interior solution. In addition, we have evaluated the role of the generalized transport rate functions in the profit-maximization location model with and without a prescribed level of output and shown that if transport rates depend on quantities shipped and have constant elasticities, then a linearly homogeneous production function is not sufficient to insure that optimum location is independent of output or the demand function. This result clearly invalidates Miller and Jensen's assertion.
Relation:
Regional Science and Urban Economics 14(2), pp.199-218
