Market Areas, Central Place Theory and Spatial Competition


  1. Review: Partial spatial analysis of supply and demand facets

  2. Micro-Economic Demand Analysis (Review your Micro-Economics text!)

  3. Deriving the "Free-Flowing Spatial Demand Cone/Curve" (Loesch/Parr)

  4. Equilibrium Market Areas (Review Economic Geography texts; also Parr)

  5. Central Place Theory

  6. Spatial Competition (Beckmann)

  7. Site Selection in Markets:

GLOSSARY: Spatial Demand Theory

Basing Point Pricing
A pricing method under which prices are quoted to include transportation from one (or more) given point(s) [= single or multiple basing point system] regardless of the location from which actual shipment is made.

Cost, Insurance & Freight to destination included in price quoted

Delivered Price
The price which includes freight charges to the location of the buyer.

Price Elasticity
of supply or demand = sensitivity of supply or demand to changes in price

Income Elasticity
of demand: with all prices constant, the change in quantity demanded of a consumption good relative to the change in income.

f.o.b. pricing
Free On Board: Mill base pricing. A pricing system in which prices are quoted for delivery at the point of production with the buyer to pay freight from that point.

Free Spatial Demand Curve
Aggregate demand schedule (price/quantity of demand function) of consumers distributed in space with varying distances from a given, central location with "price" to include transport costs from this location to consumers; it is "free" (flowing) in that it is not constrained by neighboring competitors. (Parr).

Partial Equilibrium
As applied to locational analysis, an equilibrium represents a balance among interdependent locational forces. A partial (as different from general) equilibrium theory of location focuses on just one or a few selected relationships (e.g. between locational access and effective demand).

"Pittsburgh Plus"
a form of spatial price discrimination based on oligopolistic collusion. The mill price at one location determines the delivered price at all locations regardless of the plant from which delivery is actually made.

Range of a Good
The maximum distance over which a business can sell its goods

Minimum demand necessary to support a business

Internet Sites:

Article on Super Bookstores ("Midnight Special Bookstore Annoyed by Superstores." These articles present some of the anger and difficulties that "superstores" have created for independent bookstores and their communities.)

Literature: (Spatial Competition)

Jovanovic, Miroslav N., Geography of Production and Economic Integration. London: Routledge, 2001. [HF 1025 J66 2001 Suzz] Ch.3: "Market Structure and Geography of Production, pp.75ff.

Todt, Horst, "Wettbewerb durch Standortwahl inder Flaeche: Die Cournot- und die Stackelberg-Loesung," in: Behnke et al, (Todt, editor) Beitrage zur Standortforschung. Schriften des Vereins fuer Socialpolitik, Band 227, 1994 (Duncker & Humblot), pp.75ff. [HT 388 B45 1994]

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