I was thinking that given that infrastructure will require pops to function, transportation costs and distance may be a thing in the game and with it a chance to better simulate the historical location patterns of various industries. In Victoria 2 an attempt was made to incorporate this element by giving a throughput bonus to a factory when an input was within the same state. It falls short for several reasons. Firstly, throughput efficiency is a production amplifier that maintains the ratio of inputs to output. Given that the most of a factory's costs consists of inputs purchases (wages coming from what's left over), throughput efficiency tends have fairly little influence on the odds a factory is profitable or not: it mostly amplifies profits and losses. For that reason a factory that's located in a state that produces one or more inputs doesn't have much of a greater chance of surviving than a factory that doesn't have inputs in the same state. Its profits will be bigger but so will its losses. The AI also never seems to consider the presence of inputs in its decisions so the locations of industries remain random. Second, the size of the bonuses seem unconnected to the inherent features of the input goods. Most factories have a max 25% throughput bonus and this bonus is subdivided between the various inputs in a rather haphazard way. Third, there's no consideration of distances beyond the state and no consideration of distanes to (sales) markets.
Urban Economics by O'Sullivan has a very interesting discussion of where firms are located, some which I think is very relevant in this regard and which I'll try to pass along. To start, ignore everything else for a moment, such as quality of infrastructure, local availability of workers and their productivity, the quality of local governance etc. In that case, the location of an industrial firm is decided by procurement costs (costs of transporting inputs to the factory) and distribution costs (costs of transporting output to markets). Where the sum of both is lowest is where a factory will be located. Either of these costs are in turn determined by monetary weight x distance, with monetary weight being the product of weight and transport cost rate. For instance, a sawmill will be closely located close to a forest because during the process of sawing them into lumber, a lot of weight is shed from the input logs, resulting in a higher (monetary) weight for wood than for lumber. A location near the forests results in the lowest total transportation costs. Generally, the more bulky, perishable, fragile, or hazardous a good is, the higher its monetary weight. A canner producing canned fruit has to deal with perishable fruit as an input while canned fruit isn't as perishable and cheaper to transport, so it will be located near a fruit farm. Assembled cars are more bulky than rolls of wire and sheets of metal so a car assembly plant will be located nearer to markets. In essence, there's a tug of war between procurement costs and distribution costs in determining a factory's location.
The same principle applies when transhipment points such as ports come into play, where goods are transfered from one transport mode to another. The sawmill may instead be located in the port, where it can combine procurement from several forests, shipped by train, and from where it can export to foreign markets by ship. Or a factory like a chemical plant or a textile mill could instead be located in a port near the ultimate market, from where it procures cotton or oil from several foreign sources. Wherever the sum transport costs are lowest, taking into account the monetary weight of the inputs and outputs.
I was thinking it might be possible to include something like this in Victoria 3, since the math isn't complicated, you just have to assign a monetary weight for a each good and multiply it by transportation distance. I'm guessing you can't include and track single cargo shipments without your computer exploding though, so maybe an approximation would be needed for that. What I think would be the big payoff is that if you'd include this you may get industries cluster or be spread out in a natural manner, and even shift in a natural manner. In the book O'Sullivan included the example of steel plants shifting from coal rich areas to iron rich areas as less coal content was required with technological change (that would perhaps tie in nicely with production methods).
If it isn't feasible to feature monetary weights, then I'd suggest you'd at least give input efficiency bonus to the presence of production of input goods in the same state, instead of throughput bonuses, and take into account that being near inputs shouldn't be as important for every type of industry. Steel plants and lumber mills should be having bigger total bonuses than bakeries or ammunition factories (hazardous goods). That should result in the former clustering near forests and coal/iron deposits and the latter being more scattered around.
Much the discussion in the book re this matter, with historical examples, can also be read in this paper: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwj156647vTxAhXPO-wKHZkpDOcQFjABegQICBAD&url=http://www2.lawrence.edu/fast/finklerm/OSullivan%20chapter%20on%20Firm%20Location.pdf&usg=AOvVaw1H6fp5OuGhPQM4-BulLihY
Urban Economics by O'Sullivan has a very interesting discussion of where firms are located, some which I think is very relevant in this regard and which I'll try to pass along. To start, ignore everything else for a moment, such as quality of infrastructure, local availability of workers and their productivity, the quality of local governance etc. In that case, the location of an industrial firm is decided by procurement costs (costs of transporting inputs to the factory) and distribution costs (costs of transporting output to markets). Where the sum of both is lowest is where a factory will be located. Either of these costs are in turn determined by monetary weight x distance, with monetary weight being the product of weight and transport cost rate. For instance, a sawmill will be closely located close to a forest because during the process of sawing them into lumber, a lot of weight is shed from the input logs, resulting in a higher (monetary) weight for wood than for lumber. A location near the forests results in the lowest total transportation costs. Generally, the more bulky, perishable, fragile, or hazardous a good is, the higher its monetary weight. A canner producing canned fruit has to deal with perishable fruit as an input while canned fruit isn't as perishable and cheaper to transport, so it will be located near a fruit farm. Assembled cars are more bulky than rolls of wire and sheets of metal so a car assembly plant will be located nearer to markets. In essence, there's a tug of war between procurement costs and distribution costs in determining a factory's location.
The same principle applies when transhipment points such as ports come into play, where goods are transfered from one transport mode to another. The sawmill may instead be located in the port, where it can combine procurement from several forests, shipped by train, and from where it can export to foreign markets by ship. Or a factory like a chemical plant or a textile mill could instead be located in a port near the ultimate market, from where it procures cotton or oil from several foreign sources. Wherever the sum transport costs are lowest, taking into account the monetary weight of the inputs and outputs.
I was thinking it might be possible to include something like this in Victoria 3, since the math isn't complicated, you just have to assign a monetary weight for a each good and multiply it by transportation distance. I'm guessing you can't include and track single cargo shipments without your computer exploding though, so maybe an approximation would be needed for that. What I think would be the big payoff is that if you'd include this you may get industries cluster or be spread out in a natural manner, and even shift in a natural manner. In the book O'Sullivan included the example of steel plants shifting from coal rich areas to iron rich areas as less coal content was required with technological change (that would perhaps tie in nicely with production methods).
If it isn't feasible to feature monetary weights, then I'd suggest you'd at least give input efficiency bonus to the presence of production of input goods in the same state, instead of throughput bonuses, and take into account that being near inputs shouldn't be as important for every type of industry. Steel plants and lumber mills should be having bigger total bonuses than bakeries or ammunition factories (hazardous goods). That should result in the former clustering near forests and coal/iron deposits and the latter being more scattered around.
Much the discussion in the book re this matter, with historical examples, can also be read in this paper: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwj156647vTxAhXPO-wKHZkpDOcQFjABegQICBAD&url=http://www2.lawrence.edu/fast/finklerm/OSullivan%20chapter%20on%20Firm%20Location.pdf&usg=AOvVaw1H6fp5OuGhPQM4-BulLihY
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