Question

3.There are three types of industrial structure or organization: monopoly, oligopoly, and perfect competition. Of those three, the Lösch location model is associated with __________. Of those three, the Weber location model is associated with __________.

4.How do the locational requirements/preferences differ between producer services providers and consumer services providers?

5.What are the three components of growth in shift-share analysis?

6.Compare Reilly’s Law of Retail Gravitation to Huff’s Competing Destinations model.

Answer 1

3. There are three types of industrial structure or organization: monopoly, oligopoly, and perfect competition. Of those three, the Lösch location model is associated with __perfect competition________. Of those three, the Weber location model is associated with _perfect competition_____.

Lösch location model is a modification of Christaller Central place theory. In that theory the assumption was made that there are no excess profits i.e. market operates at Perfect competition

Weber Location Model assumes perfect competition, implying a high number of firms and customers, small firm sizes (to prevent disruptions created by monopolies and oligopolies) and a perfect knowledge of market conditions, both for the buyers and suppliers.

4. Providers of consumer require more interaction between sellers and finding a location that will attract people like is there a lot of parking, is it appealing etc. Whereas provides of producer services do not need a lot of interaction between seller and buyer. Then can maximize locational rent at a less accessible location. Drawn to major transportation and where land is cheap. There is a distance decay in producer service transactions.

5.

5. To conduct the shift-share abalysis, each regional change is decomposed into three components.

1. National growth effect: It is the portion of change attributed to the total growth of the national economy. It equals the theoretical change in the regional variable had it increased by the same percentage as the national economy.
2. Industry mix effect is the portion of the change attributed to the performance of the specific economic industry. It equals the theoretical change in the regional variable had it increased by the same percentage as the industry nationwide, minus the national growth effect.
3. Local share effect is the portion of the change attributed to regional influences, and is the component of primary concern to regional analysts.It equals the actual change in the regional variable, minus the previous two effects.

6. As per the Reilly's "law," customers are willing to travel longer distances to larger retail centers because of the higher attraction they present to customers. In Reilly's formulation, the attractiveness of the retail center becomes the analogy for size (mass) in the physical law of gravity.

According to the Huff's Competitng destinations model, it is not only the size of the retail center but alos other parameters that define the attraction of a retail center. As per the model, the probability (Pij) that a consumer located at i will choose to shop at store j is calculated according to the following formula (Huff 2003).


Where:

• Aj is a measure of attractiveness of store j, such as square footage
• Dij is the distance from i to j
• is an attractiveness parameter estimated from empirical observations
• is the distance decay parameter estimated from empirical observations
• n is the total number of stores including store j.

The quotient received from dividing by is known as the perceived utility of store j by a consumer located at i. The parameter is an exponent to which a store’s attractiveness value is raised, and enables the user to account for nonlinear behavior of the attractiveness variable. The parameter models the rate of decay in the drawing power of the store as potential customers are located further away from the store. Increasing the exponent would decrease the relative influence of a store on more distant customers.