The ability of an individual, company, or economy to conduct an activity better than another for reasons related to location. Location-specific advantages are important in making decisions such as the products one should make or sell; if a company is unable to make a product as well as another because resources are unavailable or difficult to acquire in a certain location, the company might be well advised to make a different product. For example, a lumber company in Oregon has a location-specific advantage to a lumber company in Arizona because there are simply more trees in Oregon. This makes it unlikely that the company in Arizona will be able to fill orders as well or as quickly as the company in Oregon. For this reason, the Arizona company's management might consider investing in mining instead of lumberjacking.
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location-specific advantagethe competitive advantages that a firm derives from its location near, say, to its raw material or to its main customers. See FIRM LOCATION.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005