Abstract
In almost all dynamic economies there is a persistent increase in demand over time for goods and services at the existinig market locations and new consumption centres come into existence almost continuously. Typically, in the shortrun in particular, such increases in demand do not bring about an equivalent growth of new firms and/or location of branches of existing units. The process of adaptation involves considerable time lags. The comparison between incremental production costs with the marginal cost of shipments from existing locations primarily account for this observed behavioural pattern. However, over a conceptual medium run of time horizon the producers will prefer to increase the length of haul and quantum of shipments from plants already in operation (Conroy, 1974, pp. 234-42).
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