Question

What basic actions by business firms and consumers tend to make Central Place Theory a common occurrence?

Answer 1

Central place theory is is an attempt to explain the number, size and location of human settlements in a residential system. To develop the theory certain assumptions are considered like all consumers have a similar purchasing power and demand for goods and services, Consumers visit the nearest central places that provide the function which they demand. They minimize the distance to be travel, perfect competition and all sellers are economic people maximizing their profits. The keys to understanding the shape of market areas are found in central place literature. Marketers frequently use various types of spatial analyses in market area planning without understanding the underlying bases of the implicit spatial and temporal relationships in the paradigms used. Central Place Theory provides a basis for understanding how towns and cities of different sizes are organized for the distribution of goods and services, and correspondingly, where higher order goods and services are available. Central place theory is fundamentally concerned with the patterns through which wholesale, retail, service, and administrative functions, plus market oriented manufacturing, are provided to consuming populations. Central places are associated with “regions of organization,” or “nodal” regions, which derive their unity from contact with or movement through the central place. The relations of central places to their zones of influence help geographers, sociologists, economists, planners, businessmen, and others. It is often a small number of firms and businesses play a pivotal role in defining the economic structure, performance and development of a regional economy. As per Central place theory trade patterns and urban patterns can be predicted based upon the threshold and range of various goods and services offered. This helps both business firms and consumers.