1. 1 Central Place Theory (CPT) Assumptions ► Isotropic plain ► Transportation costs are a linear function of distance ► Population is evenly distributed ► Rational behaviour ► Consumers have identical preferences ► Market characterized by free entry (i.e.perfectly competitive)

2. - CENTRAL PLACE: settlement that provides goods & services. - SPHERE OF INFLUENCE: surrounding the CP, area that falls under the economic, social, political influence (hinterland). - FUNCTIONAL HIERARCHIES: generalizations regarding spacing, size and function of settlements. - HIGH/LOW ORDER SETTLEMENTS, low order settlements provide simple, basic services (grocery stores, etc) high order settlements have specialized services (universities, concert halls) ‏

3. 3 Important definitions: Threshold: minimum DEMAND (volume of sales) needed for a business to stay in operation (and make a “normal” profit). Range: maximum distance over which a good can be sold from point P (i.e. where real price is low enough that people will travel to market to buy it)

4. 4 Market location Spatial Demand Cone RANGE: The spatial extent of demand before demand drops to zero Increasing real price

5. 5 Demand = zero

6. 6 Implications of the RANGE R T M Isotropic surface Area of Extra ProfitMin area required to stay in business (normal profits) ? Unmet demand for same good or service

7. 7 Implication of RANGE: room for more than one producer of same good / service where would producer locate? > 2*R avoiding overlap

8. 8 Implications of the RANGE R T M Homogeneous plain ? Unmet demand for same good or service R T M 2R distance

9. 9 R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M ? Unmet demand for same good or service

10. 10 R T M How can problem of interstitial areas of unmet demand be solved?

11. 11 R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M Interstitial areas of unmet demand disappear if markets are moved closer together

12. 12 R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M R T M How will market area boundaries form given the ellipses formed by overlapping market areas? Overlapping Trade Areas Unfilled demand now served Competition

13. 13 R T M A system of hexagonal market areas fills the plain so that every consumer is served and no market areas overlap No Overlapping Trade Areas Unfilled demand now served No competition Every producer making “normal profit” Homogeneous plain

14. 14 Further economic / spatial complications: T and R are good- or service- specific Separate demand curves / cones for each good or service Why? Different levels of demand Different sensitivity to distance etc.

15. 15 Distance Q Demanded Distance Good / service A Good / service B Good / service C

16. 16 Distance Q Demanded Distance Good / service A Good / service B Good / service C Range A Range B Range C

17. 17 Distance Q Demanded Distance Good / service A Good / service B Good / service C Range A Range B Range C

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20. 20 Orders of Goods / Services lower order goods small T & R (high frequency, low cost) higher order goods large T & R (low frequency, high cost goods) i.e. different “geographies” for different goods / services

21. A GENERAL GRAPH CONCERNING FUNCTIONS !

22. Christaller’s Follies Or: Why doesn’t this always work? There are, however, some near perfect examples of Christaller’s theory to be found in the Canadian prairies and the Netherlands. -Large areas of flat land rarely exist -Transport has changed since his day -People/wealth are not evenly distributed -Folks don’t always choose the central place! -Purchasing power/needs not all the same -Governments have control over location of industry/towns -Perfect competition = unreal -Places don’t stay the same forever -Does not fit industrial areas There are, however, some near perfect examples of Christaller’s theory to be found in the Canadian prairies and the Netherlands.

23. 23 Central Place Theory: Recap Tertiary activities: the city as a commercial centre… …within a hierarchical system Umlands Simplifying assumptions Spatial organization

24. 24 Central Place Theory A way of thinking about hierarchies Urban centres Urban functions Market areas A starting point for theorizing about space and spatial dynamics The basis for retail and trade area studies for planning urban commercial functions and macro- marketing