INVESTMENT AND TRADE 195 In the early stages of introduction of a new product,producers were usually confronted with a number of critical,albeit transitory, conditions.For one thing,the product itself may be quite unstand- ardized for a time;its inputs,its processing,and its final specifica- tions may cover a wide range.Contrast the great variety of auto- mobiles produced and marketed before 1910 with the thoroughly standardized product of the 1930's,or the variegated radio designs of the 1920's with the uniform models of the 1930's.The unstand- ardized nature of the design at this early stage carries with it a number of locational implications. First,producers at this stage are particularly concerned with the degree of freedom they have in changing their inputs.Of course, the cost of the inputs is also relevant.But as long as the nature of these inputs cannot be fixed in advance with assurance,the calcula- tion of cost must take into account the general need for flexibility in any locational choice.1 Second,the price elasticity of demand for the output of individ- ual firms is comparatively low.This follows from the high degree of production differentiation,or the existence of monopoly in the early stages.2 One result is,of course,that small cost differences count less in the calculations of the entrepreneur than they are likely to count later on. Third,the need for swift and effective communication on the part of the producer with customers,suppliers,and even competi- tors is especially high at this stage.This is a corollary of the fact that a considerable amount of uncertainty remains regarding the ultimate dimensions of the market,the efforts of rivals to preempt that market,the specifications of the inputs needed for production, and the specifications of the products likely to be most successful in the effort. All of these considerations tend to argue for a location in which communication between the market and the executives directly con- cerned with the new product is swift and easy,and in which a wide versity Press,1960),pp.38-85;Max Hall (ed.),Made in New York (Cam- bridge:Harvard University Press,1959),pp.3-18,19 passim;Robert M. Lichtenberg,One-Tenth of a Nation (Cambridge:Harvard University Press, 1960),pp.31-70. 1.This is,of course,a familiar point elaborated in George F.Stigler, "Production and Distribution in the Short Run,"Journal of Polilical Econ- omy,XLVII (June 1939),305,et seq. 2.Hufbauer,op.cit.,suggests that the low price elasticity of demand in the first gtage may be due simply to the fact that the first market may be a "captive market"unresponsive to price changes;but that later,in order to expand the use of the new product,other markets may be brought in which are more price responsive.INVESTMENT AND TRADE 195 In the early stages of introduction of a new product, producers were usually confronted with a number of critical, albeit transitory, conditions. For one thing, the product itself may be quite unstand￾ardized for a time; its inputs, its processing, and its final specifica￾tions may cover a wide range. Contrast the great variety of auto￾mobiles produced and marketed before 1910 with the thoroughly standardized product of the 1930's, or the variegated radio designs of the 1920's with the uniform models of the 1930's. The unstand￾ardized nature of the design at this early stage carries with it a number of locational implications. First, producers at this stage are particularly concerned with the degree of freedom they have in changing their inputs. Of course, the cost of the inputs is also relevant. But as long as the nature of these inputs cannot be fixed in advance with assurance, the calcula￾tion of cost must take into account the general need for flexibility in any locational ch0ice.l Second, the price elasticity of demand for the output of individ￾ual firms is comparatively low. This follows from the high degree of production differentiation, or the existence of monopoly in the early stage^.^ One result is, of course, that small cost differences count less in the calculations of the entrepreneur than they are likely to count later on. Third, the need for swift and effective communication on the part of the producer with customers, suppliers, and even competi￾tors is especially high at this stage. This is a corollary of the fact that a considerable amount of uncertainty remains regarding the ultimate dimensions of the market, the efforts of rivals to preempt that market, the specifications of the inputs needed for production, and the specifications of the products likely to be most successful in the effort. All of these considerations tend to argue for a location in which communication between the market and the executives directly con￾cerned with the new product is swift and easy, and in which a wide venity Press, lW), pp. 38-85; Max Hall (ed.), Made in New York (Cam- bridge: Harvard University Press, 1959), p?. 3-18, 19 passim; Robert M. Lichtenberg, One-Tenth of a Nation (Cambridge: Harvard University Press, lW), pp. 31-70. 1. This is, of course, a familiar point elaborated in George F. Stigler, "Production and Distribution in the Short Run," Jouml of Political Econ￾omy, XLVII (June 1939), 305, et seq. 2. Hufbauer, op. cit., suggests that the low price elasticity of demand in the first stage may be due simply to the fact that the first market may be a "captive market" unresponsive to price changes; but that later, in order to expand the yse of the-new product, other marketa may be brought in which are more pnce responmve