This paper introduces risk into location and land-use choices of a profit-maximizing urban firm. Although risk has been introduced into the location theories of Von Thünen, Weber, and Hotelling (Asami and Isard, 1989), it has not to our knowledge been incorporated into a firm’s choice of...

The theory of the urban firm has been moribund for thirty years. We believe this is due to the perception that the theory cannot generate testable hypotheses. In fact, the theory yields unambiguous comparative static results. We find location and land use directly related to product price and...