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Location theory
Distance to Market
There is more than one commodity, will
result in the most optimum land rent for
each commodity.
R = E ( p – a ) – E. f. k
Commodity A
Land
Rent Commodity B
1500
Vegetable
R = E ( p – a ) – E. f. k
s
1000
Corn
500
Livestock
10 20 50
Market DISTANCE
Veg.
Corn
Livestock
Farmers planted with apple harvest 2 tons / ha, while
the market price of apples in IDR. 5 million / ton and
production costs IDR. 1.5 million / ton. the transport
cost to market are IDR. 100.000 / ton / km. How far is
the maximum distance from the market that allows
farmers to grow apples?
R = E ( p – a ) – Efk
R = E ( p – a ) – Efk
R = 2 ( 5 – 1.5) – (2)(0.1)k
ASSUMPTION
R = 0 , Zero land rent / no private profit / not
possible anymore for planting apples.
0 = 10 – 3 – 0.2k
0.2k = 7 ------- k = 35 km as the maximum
distance
Commodity A B C
Market price
(IDR/Kg) 600 300 500
harvest
(ton/Ha) 1 3 2
Production cost
(IDR/Kg) 400 100 200
Transport cost
(IDR/Km/Kg) 2 4 3
1. What kind of commodities grown in areas
close to the market?
2. What kind of commodities grown in a
location away from the market?
3. Draw the diagram above three commodities
von Thunen!
•Land Use Model
•Urban Sprawl
Von Thunen Land
Rent
Urban bid-rent
Curve (distance decay
function)
used as the basis for
the analysis of land
use and is a basic
component in the
model land use until
now.