The Space Cost Curve and Variable Transport Costs: a General Production Function Case

This paper attempts to incorporate a production function with input substitution into the Smith model and to re-examine the basic properties and the shape of space cost curve. It has shown the space cost curve will be (i) concave from below in the distance plane, when the transport rate is constant or decreasing with distance; (ii) linear, convex or concave from below in the distance plane, when the transport rate is increasing with distance. This result is quite different from Smith's, Richardson's and Mai's.