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This article aims to investigate empirically the influences of concentration, exports, and exchange rate on industry profitability in a small open economy, in Taiwan. Developing a simple theoretical framework and utilizing panel data of four-digit manufacturing industries over the period 1986–96 to test our findings indicate that concentration has a positive impact on profit margin, while the impacts of export intensity and external exposure are significantly negative. This result indicates that export-intensive industries tend to have a lower profitability in Taiwan, because export firms act as price takers in international markets. Moreover, the exchange rate is found to have a relatively strong and significant effect on industry profitability, whereby the devaluation of the New Taiwan Dollar hurts more those industries with a higher share of imported inputs during the sample period.

One of main conclusions drawn by prior studies is that in a spatial market, the shape of the demand function can fully determine whether one simple pricing policy is superior to another either on the basis of the firm’s preference or social desirability while there is one assumption that is generally stipulated, namely, that the fixed market area assumption under which the market area is exogenously determined and remains the same under alternative pricing policies. In order to fully understand the impact of a demand function, this paper attempts to reexamine the relative economic advantages between two simple spatial pricing policies in a world with variable market area, that is, the market area is endogenously determined the price charged. We show that the fixed market area assumption is valid only where demand is linear, but no longer holds where demand is nonlinear. Moreover, and more importantly, we show that in a world with variable market area, some conclusions drawn by prior studies on the relative economic benefits of two pricing policies cannot remain valid. The main conclusion of this paper is that even the relative economic benefits of two simple spatial pricing policies is concerned, the impact of economic space is significant.

This paper attempts to provide a general comparative static analysis on a firm's choice of production location with respect to variations in the degree of risk aversion under demand price, input price, and technology uncertainties. Our analysis shows that whether and how the plant location varies with a change in the firm's degree of risk aversion depend upon the nature of the production technology and how the input and location choice affect risk. It also demonstrates that some of our results are new, while some are generalizations of those obtained by Martinich and Hurter (1982).

This paper examines the validity of the location invariance theorem in Weberian space under various types of uncertainty. The main results are: Given that the firm's location is constrained to remain at a specified distance from the output market, the optimal location is invariant to any change in product demand if and only if the production function is homothetic for a firm facing demand price uncertainty, or if the production function is homothetic and both inputs are risk-neutral for a firm facing technological uncertainty. Alternatively, given that the distance from the firm's location to the output market is a variable, location invariance occurs for a firm facing demand price uncertainty if the production function is linear homogeneous. In the presence of input price uncertainty the optimal location always varies with a change in product demand. The results can include those previously obtained for linear stochastic location models as special cases and some are new contributions to the literature.

This paper attempts to examine the validity of the exclusion theorem on a line under a stochastic environment in a more general context than prior studies. Our analysis shows that there are three key factors determining the intermediate or the corner location to be optimal; namely, including the type of uncertainty, the firm's attitude toward risk, and the convexity of the total transportation cost function. The main result is presented, and a comparison of our finding with those obtained by prior studies is then provided.

In this paper we employ a unifying approach to examine the exclusion theorem in a Weberian space under various types of uncertainty: input price or output price uncertainty, transport rate uncertainty, and technology uncertainty. The novelty of our approach is the usage of second-order conditions and comparative static analysis in the derivation of conditions for thevalidity of the exclusion theorem. Our main results are new and some are generalizations of those obtained in prior studies.

In this paper we examine the implications of technology uncertainty for production location in a general setting, in which the location and production decisions are determined ex ante and a general specification of technology uncertainty is adopted. In addition, to examine the endpoint optimality issue, we also provide comparative static results which are novel in the literature. Moreover, the exhaustion of information contained in the second-order optimal conditions in deriving the conditions for endpoint optimality differentiates our analysis from previous works.

Although the location theory of industry has received much attention in the literature, Hsu (1997) has demonstrated that the theory developed to date is not applicable to an agroindustry, that is, the industry of processing the agricultural product. Recognizing that the complete analysis of Hsu (1997) has been conducted in a deterministic world, and that in an economy subject to spatial friction, market information about prices is often incomplete and costly, the firm, accordingly, faces many types of uncertainty in making its location decision. This paper attempts to develop systematically the theory of plant location for an agroindustrial firm under output price uncertainty. Our analysis shows that the presence of output price uncertainty has significant influence on an agroindustrial firm‘s location decision. Most pointedly, a risk-averse agroindustrial firm‘s choice of production location under output price uncertainty always differs from the one under certainty. It also demonstrates that in many respects, the implication of output price uncertainty for an agroindustrial firm is in sharp contrast to its non-agroindustrial counterpart.

Although the location theory of industry has received much attention in the literature, Hsu (1997) has demonstrated that the theory developed to date is not applicable to an agroindustry, that is, the industry of processing the agricultural product. Recognizing that the complete analysis of Hsu (1997) has been conducted in a deterministic world, and that in an economy subject to spatial friction, market information about prices is often incomplete and costly, the firm, accordingly, faces many types of uncertainty in making its location decision. This paper attempts to develop systematically the theory of plant location for an agroindustrial firm under output price uncertainty. Our analysis shows that the presence of output price uncertainty has significant influence on an agroindustrial firm`s location decision. Most pointedly, a risk-averse agroindustrial firm`s choice of production location under output price uncertainty always differs from the one under certainty. It also demonstrates that in many respects, the implication of output price uncertainty for an agroindustrial firm is in sharp contrast to its non-agroindustrial counterpart.

The purpose of this paper is to develop systematically the theory of plant location for a competitive firm facing random input price. It will be shown that the impact of input price uncertainty on the firm's optimum location depend crucially upon (i) the firm's attitude toward risk, (ii) the characteristics of the production function, (iii) the structure of transport costs on inputs and output, and (iv) the type of input usages. Moreover, and more importantly, some conclusions obtained by prior studies on location theory in a certainty world can also be shown to be special cases of our more general results, but some are not justifiable in a world with random input price.

This paper investigates optimal spatial price patterns derived on the basis of welfare maximization (in terms of consumer surplus plus profit) under alternative spatial pricing policies, including discriminatory, fo.b., and c.i.f. pricing. It shows that under all forms of spatial pricing policies, optimal spatial prices should equate marginal costs of production with the mill price, and that transportation costs incurred are always charged to consumers, even in the case of c.i.f. pricing. In addition, it shows that society never prefers c.i.f. to any other pricing policies, and is always indifferent between discriminatory and Lo.b. pricing. Some additional properties of optimal spatial prices are also presented.