limate and the quality of the local water and air fall into the same category, as do topography and physical soil structure ofar as they affect construction costs, amenity and convenience. Locally provided public services such as police and fire he short run at least) is another, usually accounting for a major portion of the total feature of all these local heir nature ghborhood ively on the disposal tuse within other he negative ould no longer iron and steel gh cost for disposing descr d upon the ing them, if we f equity but le inputs-such as fuels, materials, tion from wherever they are produced. ctivities r example automob different sources. Anal or of access to places where such outputs are in der 33 er to markets. To irces to the location in question, reflectir ; in particular, the net receipts from such sales, for output"means the demand for the output of the specifi ation, and not the aggregate demand for all output of of course, by the degree of competition; ors. The same holds true for supply of an g units and the resulting patterns of location for types of activities are eristics of locations. But in order to rate the or public facility, one needs to or shoe factory or less specific classes of activities. Those Those interested in community ies, government administrators, Perhaps the most direct method: Ask the people who are making the locational decision. In many questionnaire surveys addressed to businessmen in connection with"industry studies,"firms have been given a list of location factors, including such items as labor cost, taxes, water supply, access to markets, and power cost,and6 Climate and the quality of the local water and air fall into the same category, as do topography and physical soil structure insofar as they affect construction costs, amenity, and convenience. Locally provided public services such as police and fire protection also are local inputs. Labor (in the short run at least) is another, usually accounting for a major portion of the total input costs. Finally, there is a complex of local amenity features, such as the aesthetic or cultural level of the neighborhood or community that plays an especially important role in residential location preferences. The common feature of all these local input factors is that what any given location offers depends on conditions at that location alone and does not involve transfer of the input from any other location. In addition to requiring some local inputs, the unit choosing a location may be producing some outputs that by their nature have to be disposed of locally. These are called nontransferable outputs. Thus, the labor output of a household is ordinarily used either at home or in the local labor market area, delimited by the feasible commuting range. Community or neighborhood service establishments (barber shops, churches, movie theaters, parking lots, and the like) depend almost exclusively on the immediately proximate market; and, in varying degree, so do newspapers, retail stores, and schools. One type of locally disposed output generated by almost every economic activity is waste. At present, only radioactive or other highly dangerous or toxic waste products are commonly transported any great distance for disposal; though the disposal problem is increasing so rapidly in many areas that we may see a good deal more long-distance transportation of refuse within our lifetimes. Other wastes are just dumped into the air or water or on the ground, with or without incineration or other conversion. In economic terms, a waste output is best regarded as a locally disposed product with negative value. The negative value is particularly large in areas where considerations of land scarcity, air and water pollution, and amenity make disposal costs high; this gives such locations an element of disadvantage for any waste-generating kind of unit. It is not always possible to distinguish unequivocally between a local input and a local output factor. For example, along the Mahoning River in northeastern Ohio, the use of water by industries long ago so heated the river that it could no longer furnish a good year-round supply of water for the cooling required by steam electric generating stations and iron and steel works. In this instance, excess heat is the waste product involved. The thermal pollution handicap to heavy-industry development could be assessed either as a relatively poor supply of a needed local input (cold water) or as a high cost for disposing of a local output (excess heat). This is just one example of numerous cases in which a single situation can be described in alternative ways. An often-neglected responsibility of government is to see that the costs of environmental pollution are imposed upon the polluting activity. The price of goods should reflect fully the social costs associated with consuming and producing them, if we value a clean environment. It is important to note that this guiding principle can be defended not only on the basis of equity but even more importantly on the basis of efficiency. 2.3.2 Transferable Inputs and Outputs A quite different group of location factors can be described in terms of the supply of transferable inputs—such as fuels, materials, some kinds of services, or information—which can be moved to a given location from wherever they are produced. Here the advantage of a location depends essentially on its access to sources of supply. Some kinds of activities (for example, automobile assembly plants or department stores) use an enormous variety of transferred inputs from different sources. Analogously, where transferable outputs are produced, there is the location factor of access to places where such outputs are in demand. The seller can sell more easily or at a better net realized price when located closer to markets. 2.3.3 Classification of Location Factors To sum up, the relative desirability of a location depends on four types of location factors: Local input: the supply of nontransferable inputs at the location in question Local demand.' the sales of nontransferable outputs at the location in question Transferred input: the supply of transferable inputs brought from outside sources to the location in question, reflecting in part the transfer cost from those sources Outside demand: the sales of transferable outputs to outside markets; in particular, the net receipts from such sales, reflecting in part the transfer costs to those markets It should be kept in mind that, throughout this chapter, "demand for output" means the demand for the output of the specific individual plant, factory, household, or other unit under consideration, and not the aggregate demand for all output of that kind. The demand for an individual unit's product at any given market is affected, of course, by the degree of competition; other things being equal, each unit will generally prefer to locate away from competitors. The same holds true for supply of an input. This and other interactions among competing units and the resulting patterns of location for types of activities are, however, the concerns of Chapters 4 and 5. 2.3.4 The Relative Importance of Location Factors The classification of location factors just suggested is based on the characteristics of locations. But in order to rate the relative merits of alternative locations for a specific kind of business establishment, household, or public facility, one needs to know something about the characteristics of that kind of activity. Just how much weight should a pool hall or shoe factory or shipyard or city hall assign to the various relevant location factors of input supply and output demand? There have been countless efforts to answer this question with respect to more or less specific classes of activities. Those concerned with location choice want to know the answer in order to pick a superior location. Those interested in community promotion seek the answer in order to make their community appear more desirable to industries, government administrators, and prospective residents. Perhaps the commonest method of measurement is the most direct method: Ask the people who are making the locational decision. In many questionnaire surveys addressed to businessmen in connection with "industry studies," firms have been given a list of location factors, including such items as labor cost, taxes, water supply, access to markets, and power cost, and