Understanding Central Place Theory and Market Analysis in Economics

1. 12-3 Central Place Theory and Market Analysis

2. I. Central Place Theory • A) Theory that explains how “consumer” services are distributed • AND WHY a regular pattern of settlement exists in MDC’s • B) Parts of the Theory:

3. B) Parts of the Theory: • Go to page 388 and write a brief definition of each: (leave 1-2 lines under each to add further notes) • 1) Central Place • 2) Hinterland • 3) Range of Service • 4) Threshold of Service

4. 1) Central Place • Definition – a market center for the exchange of goods and services by people attracted from the surrounding area Question? Where would be the “central place” in Von Thunen’s model?

5. You got it, honey bun!!!!!!!!!!

6. 2) Hinterland • Definition: AKA market area – area surrounding a service from which customers are attracted. • - Shape – Which one is best? Why?

7. 3) Range • Definition – the maximum distance people are willing to travel to use a service. Applies to TIME of travel too Which one has the largest range????

8. 4) Threshold • 4) Definition – the minimum number of people needed to support the service. I feel so stupid! Size of Service

9. Also TYPE of service! Thresholds for these will be different depending on WHAT?

10. II. Market-Area Analysis • A) Profitability of a Location- Range and Threshold considered together • B) Location within a market • Gravity Model -directly related ---number of people in the area and… -inversely related---distance people must travel.

11. IN OTHER WORDS: • -LARGER # PEOPLE -LESS DISTANCE The more customers that will be “pulled” to the service (gravity model) THE SERVICE

12. Gravity Model: Cities • Sample Question: • Which of the following would have the most interaction according to the Gravity Model? • A) 2 small towns a medium distance apart. • B) 2 medium cities a large distance apart • C) a small city and a large city a far distance apart • D) 2 very large cities a medium distance apart.

13. THE END!

14. TEACHER NOTE: • CAN CONTINUE ON “OR” ASSIGN HOMEWORK CORNELL NOTES 12-3 (b)

15. III. Hierarchy of services and settlements • A) Small Settlements must have businesses with • small thresholds, short ranges and small market areas. • SO large settlements or cities have businesses with …….. WRONG! ALL SIZES of Services

16. B) Linear Settlements vs. Non-linear (page 391-392) Name this town? St Joseph, Quebec

17. C) Nesting Market Areas Large city Small town

18. OR A large mall A gas station

19. D) Rank-Size Rule (nth largest settlement is 1/nth of the largest settlement.) Clear hierarchy of cities. (straight line) US and a few others follow this rule.

20. If a country follows the rank-size rule and the largest city has 1 million people in it… • Then how many people are in the 4th largest city in the country? • ANS: 250,000 • How about the 10th largest city? • ANS: 100,000

21. E) Primate City Rule • 1 - A primate city is WAY larger than the 2nd largest city. • 2 - Example: FRANCE (many LDCs) • Paris, (11 million) next largest city • Lyon, France (2 million)

22. What City is This?????? • 3 – MDC’s that have a primate city STILL follow rank-size rule at other levels. • 4 – LDC’s also have primate cities but don’t follow the rank-size rule at other levels. Lagos, Nigeria Population: 8 Million

23. 5 – Importance of rank size rule • Shows that a country is wealthy enough to have access to consumer goods all OVER the country. Pg. 388

24. 6 – Periodic Markets Name That City??? Kinshasa, Rep. of Congo

25. The End! Hindu Pilgrims trying to board a Train to attend a festival in Mathura, India