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CENTRAL PLACE THEORY

- Commercial activities: the single most important economic function of most cities.

- Cities exist economically to serve the requirements of other areas, thru its secondary and tertiary economic activities, aside from therequirements of the city itself.

- The Classical Model of Central Place Theory

- Formulated by Walter Christaller in 1933, in his pioneering work Central Places in Southern Germany.

- Christaller maintains that there is an overall ordering theory that explained the distribution of urban centers, or Central Places, as well as

their size and number in a given region.

- Urban places are termed Central Places because of their natural tendency to be located centrally to their trading area.Central places are viewed as settlements that function entirely as Market Centers for their surrounding areas, based on their secondaryand tertiary economic activities.

- The theory is anchored on the view that . .. T h e c r y s t a l l i za t i o n o f m a s s a r o u n d a n u c l e u s i s . .. a n e l e m e n t ar y f o r m o f o r d e r o f t h i n g s w h i c h b e l o n g s t o g e t h e r - a c e n t r al i s t i c o r d e r .

- A central place serves as the center of a region.Larger central places serve larger regions because they are more centrally located and more accessible to its region.Thus, the importance of a central place is directly related to its centrality, or the relative importance of a place with regard to the regionsurrounding it.

- Conceptual Elements of the theory:

1. Ranking/ Order of Central Places

-H igher-order C entral Places: larger number of central functions; bigger market area.

-L o w e r - o r d e r C e n t r a l P l a c e s : lesser number of central functions; smaller market area.

2. Ranking / Order of Goods and Services

-L o w - o r d e r g o o d s / s e r v i c e s : those for everyday use (convenience stores, sari-sari stores)-M e d i u m - o r d e r g o o d s / s e r v i c e s : those needed frequently but not everyday (drugstores, banks, barber shops)-H i g h - o r d e r g o o d s / s e r v i c e s : those needed occasionally (furniture shop, legal or medical services)

The higher the order of a good/ service, the higher the order of the central place that will economically support that good/ service.

3. Range of a Good the farthest distance consumers are willing to travel for a particular good or service offered at a central place.

-The lower the order of a good/ service, the lesser the distance willing to be travelled by a consumer.-The higher the order of a good/ service, the greater the distance the consumer is willing to travel.-Thus, lower order goods/ services are found in every central place, whether large or small.-Higher order goods/ services are found only in the higher order central places to which the consumers are willing to travel greater

distances.

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4. Threshold: The minimum level of sales or profit for an economic activity to exist.

-Threshold size varies directly with level of centrality required by an economic activity.-Goods/ services requiring higher level of sales/ profit must locate in central places with higher order of centrality - or higher order

central places.-In contrast, lower order goods/ services are ubiquitous - found in every central place as they do not need higher level of centrality

to realize profit.

- Christallers Hexagonal Trade Areas

- 2 Basic assumptions of theory:

1. Isotropic plain: no physical barriers; movement is equally possible in all directions.2. Rationality of consumers: consumers behave strictly on economic motivation and will travel to the nearest place offering the desired

good/ service to achieve distance minimization.

- Circular Trade Areas: Limitations1. Some areas will be left unserved by any central place.2. If circular trade areas are made to overlap in order to cover all areas, there will be duplication between central places.3. But with distance minimization by consumers, the overlaps will be split between central places and thus, the resulting hexagonal

trade area pattern, with each center surrounded by 6 other central places of the same level.

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