Another use i? in estimating potential cost reductions to the firm 

 or the amount that may he added to a grower's income from relocating 

 or shifting from one firm to another. Assume the grower in the above 

 example can relocate to a point only 30 road miles from the firm's facili- 

 ties with no change in output. The reduction of 30 miles amounts to a 

 decrease of 0.45 cents a pound or approximately $400 per flock. Assum- 

 ing the grower produces five flocks a year, the annual reduction in cost 

 approximates $2,000. The annual cost of the spatial activities to the 

 new location is $4,700 instead of $6,700 at the old location. This example 

 illustrates the potential reduction in cost that a firm may gain if it shifts 

 production from a grower 60 miles away to a new grower of like capacity 

 30 miles away. 



Persuading a grower to relocate to a closer location will probably 

 require some compensation. In the above example, the firm could offer 

 up to $2,000 more a year for the same output produced at the closer 

 location. But the probability of the firm giving the grower all the savings 

 is rather remote. It is far more likely that the firm and grower will com- 

 promise and share the savings. 



Assuming that the firm and grower share the savings equally has a 

 substantial effect on the income of the grower. If the grower experiences 

 no change in annual cost or output as a result of the shift in location, 

 his net income is increased by $1,000 a year. If the grower receives a re- 

 turn of three quarters of a cent a bird a week and the growing period is 

 eight weeks, the annual income from five flocks of 25,000 birds each is 

 $7,500. The additional $1,000 makes the gross income $8,500 and repre- 

 sents a 13 percent increase. 



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