Assignment Problems and the Location of Economic Activities

Two problems in the allocation of indivisible resources are discussed, which can be interpreted as problems of assigning plants to locations. The first problem, in which cost of transportation between plants is ignored, is found to be a linear programming problem, with which is associated a system of rents that sustains an optimal assignment. The recognition of cost of inter-plant transportation in the second problem introduces complications which call for more laborious and largely unexplored computations and which also appear to defeat the price system as a means of sustaining an optimal assignment.