Economic Geography Services AP HuG

Types of Services Decide where your job goes and tape it (or use a magnet) up on the board under the correct heading Not services Consumer Services Public Services Business Services

Consumer Services Provide services to individual consumers ½ of all US jobs are consumer service jobs 4 main types Retail/wholesale Education (but not public school teachers) Health & Social Services Leisure/hospitality

Facilitate activities of other businesses ¼ of all US jobs Business Services Facilitate activities of other businesses ¼ of all US jobs 3 main types Professional services Financial services Transportation & information

Public 10% of all US Jobs Provide security and protection Includes public school teachers

Deindustrialization Long term decline in industrial employment Post –Industrial Status – more service sector jobs

US Job Sectors 1960 2010

Major characteristics of post Industrialization High Urbanization Dominance of service sector Prevalence of Professionals and highly skilled specialists Infrastructure based on information & communication networks Knowledge based economy

Location Theories for Services

Services are market oriented, therefore. . . . . .

Harold Hotelling American Mathematician Economic statistics famous for his Beach Story

Suppose that two owners of refreshment stands, George and Henry, are trying to decide where to locate along a stretch of beach. Suppose further that there are 100 customers located at even intervals along this beach, and that a customer will buy only from the closest vendor. Finally, assume that the beach is short enough so that total sales are independent of where the vendors locate. Suppose that initially the vendors locate at points A and C in the illustration below. These locations would minimize the average traveling costs of the buyers and would result in each vendor getting one half of the business. However, this solution would not be an equilibrium. If George moved from point A to point B, he would keep all customers to his left and get some of Henry's customers. For similar reasons, Henry would move toward the center, and in equilibrium, both vendors would locate together in the middle. Hotelling video

Your location should be influenced by competitors Maximize your revenue

Growth Poles Cluster of firm conducting research Usually related to the technology industry Silicon Valley is an example of a growth pole – specifically a technopole

Christaller’s Central Place theory

To identify the most profitable location for your consumer service Purpose: To identify the most profitable location for your consumer service

Central Place Market center for exchange of good and service by people attracted from the surrounding area (that area is called the market area or hinterland) Centrally located to maximize accessibility Most people are likely to go to the nearest. .

Need to know the Range & Threshold What is the market area? Varies Need to know the Range & Threshold

How far are you willing to travel for that service? Range of a service How far are you willing to travel for that service? Pizza? Doctor? Concert? Range

Sample Ranges Mc Donald’s – 3 miles Casual dining – 5 miles Stadium – 60 miles

Threshold Minimum number of people needed to support the service (potential customers) Number depends on service – movies, thrift stores, amusement parks, nightclubs, malls appeal to different segments of society

Profitability of a location Compute the range Compute the threshold Draw the market area

4 levels of markets Hamlets Village Small town City

Rank Size Rule

Rank Size Rule: The nth largest settlement is 1/n the population of the largest settlement The 4th largest settlement is ¼ the population of the largest settlement

Does it work in the US? New York City 8.2 million Phoenix 1.4 San Antonio 1.3 Los Angeles 3.8 million San Diego 1.25 Dallas 1.2 Chicago 2.8 million San Jose .9 Houston 2.1 million Philadelphia 1.5 million

How about in WA? Seattle 608 Everett 103 Spokane 208 Kent 92 Tacoma 198 Yakima 91 Vancouver 161 Renton 90 Bellevue 122 Federal Way 89

Primate city Rule If the country doesn’t follow the Rank Size rule, it may follow the primate city rule Primate City – country’s largest city Rule – the largest settlement has more than twice the population than the second ranking settlement