Discuss the factors that influence the location of a plant with reference to thermal and nuclear power plant?

Answer 1

BUSINESS LOCATION
Why do firms locate where they do? There is no single answer-different firms choose their locations for different reasons. Key determinates of a location decision are a firm's factors of production. For example, a firm that spends a large portion of total costs on unskilled labor will be drawn to locations where labor is relatively inexpensive. A firm with large energy demands will give more weight to locations where energy is relatively inexpensive. In general, firms choose locations they believe will allow them to maximize net revenues: if demand for goods and services is held roughly constant, then revenue maximization is approximated by cost minimization.

The typical categories that describe a firm's production function are:

• Labor. Labor is often and increasingly the most important factor of production. Other things equal, firms want productivity, in other words, labor output per dollar. Productivity can decrease if certain types of labor are in short supply, which increases the costs by requiring either more pay to acquire the labor that is available, the recruiting of labor from other areas, or the use of the less productive labor that is available locally.
• Land. Demand for land depends on the type of firm. Manufacturing firms need more space and tend to prefer suburban locations where land is relatively less expensive and less difficult to develop. Warehousing and distribution firms need to locate close to interstate highways.
• Local Infrastructure. An important role of government is to increase economic capacity by improving quality and efficiency of infrastructure and facilities, such as roads, bridges, water and sewer systems, airport and cargo facilities, energy systems, and telecommunications.
• Access to Markets. Though part of infrastructure, transportation merits special attention. Firms need to move their product, either goods or services, to the market, and they rely on access to different modes of transportation to do this. While transportation has become relatively inexpensive compared to other inputs, and transportation costs have become a less important location factor, access to transportation is still critical. That long-run trend, however, could shift because of decreasing funds to highway construction, increasing congestion, and increasing energy prices.
• Materials. Firms producing goods, and even firms producing services, need various materials to develop products that they can sell. Some firms need Natural Resources: a manufacturing sector like lumber needs trees. Or, farther down the line, firms may need intermediate materials: for example, dimensioned lumber.@@@@@
• Entrepreneurship. This input to production may be thought of as good management, or even more broadly as a spirit of innovation, optimism, and ambition that distinguishes one firm from another even though most of their other factor inputs may be quite similar.
The supply, cost, and quality of any of these factors obviously depend on market factors: on conditions of supply and demand locally, nationally, and even globally.

But they also depend on public policy. In general, public policy can affect them through:
• Regulation. Regulations protect the health and safety of a
community, and help maintain the quality of life. However, simplified bureaucracies and straightforward regulations can help firms react quickly in a competitive marketplace.@@@@@
• Taxes. Firms tend to seek locations where they can optimize their after-tax profits. But tax rates are not a primary location factor, they matter only after corporations have made decisions on labor, transportation, raw materials, and capital costs. Within a region, production factors are likely to be similar, so differences in tax levels across communities are more important in the location decision than are differences in tax levels between regions.
• Financial incentives. Governments offer firms incentives to
encourage growth. Generally, economic research has shown that most types of incentives have had little significant effect on firm location between regions. However, for manufacturing industries with significant equipment costs, property or investment tax credit or abatement incentives can play a significant role in location decisions. Incentives are more effective at redirecting growth within a region than they are at providing a competitive advantage between regions.
Firms locate in a city because of the presence of factors other than direct factors of production. These indirect factors include agglomerative economies, also known industry clusters, location amenities, and innovative capacity.
• Industry Clusters. Firms tend to locate in areas where there is already a concentration of firms like their own. The theory works in practice because firms realize operational savings and have access to a large pool of skilled labor when they congregate in a single location.

• Quality of Life. A region that features many quality amenities, such as good weather, recreational opportunities, culture, low crime, good schools, and a clean environment attracts people simply because it is a nice place to be. A region's quality of life attracts skilled workers, and if the amenities lure enough potential workers to the region, the excess labor supply pushes their wages down so that firms can find skilled labor for a relatively low cost.
• Innovative capacity. Increasing evidence suggests that a culture promoting innovation, creativity, flexibility, and adaptability will be essential to keeping MANY cities economically vital and internationally competitive. Innovation is particularly important in industries that require an educated workforce. High-tech companies need to have access to new ideas typically associated with a university or research institute. Government can be a key part of a community's innovative culture, through the provision of services and regulation of development and business activities that are responsive to the changing needs of business