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OUTLINEIntroduction
The Analysis of Market Areas
Central Place Theory
Urban Giantz: The Puzzle of the Large Primary City
INTRODUCTION
Urban Developme
nt
Regional
Perspective
REGIONAL SYSTEM OF CITIES : Different size and scope
Three section on this chapter1st, How firms in a market-oriented industry carve a region into
individual market areas and why some industries have large market than others?
2nd, uses central place theory to explain how the location patternsof different industries are merged to form a regional system of cities
3rd, explores some possible reasons for the development of giant citiesin developing countries
THE ANALYSIS OF MARKET AREAS (1)Characteristic of The Region:
Common Store Price; technology, input prices
Travel Cost; the monetary and time cost of travel
Shape;the region is rectangular
THE ANALYSIS OF MARKET AREAS (2) Pricing with a Monopolist
FIGURE 5-1 Net Prices of CDs under a Monopoly
30 20 10 0 10 20 30
8
13
18
Net Price ($)
Distance from center of region
(miles)
Travel cost of consumer = ∆ distance from center ∆ net price
.....FIGURE 5-2 Price and Quality with a Single Music Store
Profit
MC
MRD=AR
APC
qm
Pm
$
Quantityof CDs per store
Profit Maximizing output (qm) = MR=MC
THE ANALYSIS OF MARKET AREAS (3) Entry and CompetitionFigure 5-3 Equilibrium Price and Quantity of CDs with Entry
Pe
Cm
qe qmqc
APC
MC
MR D=ARQuantityof CDs per store
$
DECREASING Price & Profit
THE ANALYSIS OF MARKET AREAS (4) Efficiency Trade-OffsFigure 5-4 Trade-Offs with Entry: Production Cost versus Travel Cost
CeCt
qe qmqc
Average Total Cost
APCAverage Travel Cost
qtQuantityof CDs per store
$
THE ANALYSIS OF MARKET AREAS (5) Market Area and Scale EconomicsFigure 5-6 Increase in Scale Economies Increases Output Per Firm
C1
q1Quantityof CDs per store
$
Original Average Total Cost
New Average Total Cost
Original Average Total Production
New Average Total Production
C2
C3
C4
q2 q3 q4
Market Area and Travel Cost
Market Area and PerCapita Demand
Market Area and Population Density
Determinants of The Market
Area:Fixed Demand
(AN ALGEBRA MODEL)
Market Area and Income
Assumptions:1. There are 3 stores in
equilibrium.2. Each sell CDs and each has a
price of $6.3. They have different locations.
An Algebra Model of Determinants of Market Area
Can we set up an algebraic model to determine the market areas of market oriented firms?
Let’s define:d: Per capita demand (number of CDs)e: Population density (per square mile)q: Output of the typical firm (CDs sold per month)
M= q/(d.e) M: Market area of the firm (in square miles) is the territory required for the firm to sell its target quantity, q.(d.e)= Demand density.
An Algebra Model of Determinants of Market Area
An Algebra Model of Determinants of Market AreaFigure 5.5 Equilibrium Market Areas
Tammy’s territory
Bob’s territory
Dick’sterritory
30 20 10 0 10 20 30
6
11
Distance from center of
origin
$ Tammy’s Net Price Bob’s Net Price Dick’s Net Price
Market Area and Travel CostFigure 5.7 Decrease in Travel Cost Increases Ouput Per Firm
C5C6
q5 q6Quantityof CDs per store
Original Average Total Cost
New Average Total Cost
Average Total Production
$
Market Area and Per Capita Demand (d)
How does an increase in per capita demand affect the size of the market are ?
an increase in per capita demand increases the demand of density (the number of CDs sold per square mile, or d
times e
d (d,e) 1If output per store is fixed, each store needs a smaller
market area to exhaust its scale economics 2
Market Area and Population Density (e)
How does an increase in population denstity affect the size of the market are ?
an increase in per capita demand increases the demand of density (the number of CDs sold per square mile, or d
times e
e (d,e) 1If output per store is fixed, each store needs a smaller
market area to exhaust its scale economics 2
Market Area and Income
There are two cities, a poor one and a wealthy one
A CDs is “normal” good (positive income elasticity of demand)
Land is a normal good (positive income elasticity)
Consider a region with the following characteristic :
PEDAGANG TRADISIONAL BERMAIN DUA PERAN DALAM TRANSAKSI PERDAGANGAN
Huckster
• pedagang adalah tukang jualan yang efektif karena dia tahu fitur dari setiap yang baik di toko dan merupakan sumber terpercaya informasi tentang produknya
Haggler
• pedagang bernegosiasi dengan masing-masing pelanggan atas harga barang. pedagang adalah orang yang menawarkan barang secara efektif karena dia tahu biaya setiap barang di tokonya
Threshold • jangkauan batas minimal kegiatan ekonomi tempat sentral
Range • jangkauan maksimum masyarakat
yang mampu menjangkau tempat sentral
CENTRAL PLACE THEORY
mempertimbangkan daerah dengan tiga produk
konsumen: CD, pizza dan perhiasan. Wilayah ini
memiliki karakteristik sebagai berikut:
Population density
No Shopping externalities
Ubiquitous inputs
Uniform demand
Number of Store
SCALE ECONOMIES
Jewelry
• skala ekonomi permintaan per kapita relatif besar
Compact discs
• Skala ekonomi permintaan per kapita relatif sedang
NUMBER OF STORE
Teori tempat sentral tidak benar-benar berlaku bagi
banyak daerah
Memberikan manfaat tentang sistem regional kota
Mengidentifikasi kekuatan pasar yang menimbulkan
sistem hirarki kota
Menguji sistem kota-kota kecil di daerah pertanian
Central Place Theory and The Real World
• The Role of Trade
• The Effect of Trade Restrictions
• The Role of Infrastructure and Politics
Urban Giants: The Puzzle of the Large Primary City
Perdagangan adalah untuk pemenuhan kebutuhan
Teori yang paling sederhana didasarkan pada
pengamatan skala ekonomi besar
Pembangunan pelabuhan membutuhkan investasi
yang besar di bidang infrastruktur
Satu pelabuhan jauh lebih efisien dari dua atau tiga
pelabuhan
The Role of Trade
• Krugman (1995) membayangkan dua kota P dan S di sebuah negara dan membagi tenaga kerja tetap di dua kota.
• Perusahaan mempekerjakan pekerja dan menjual hasil mereka kepada pekerja dan konsumen.
• Perspektif seorang pekerja memilih kota P atau S sebagai tempat tinggalnya? apa timbal balik bagi pekerja, mengingat bahwa P adalah kota besar (sebagian besar pekerja di P)?
1. kabar buruk: biaya Komuter yang lebih tinggi
2. kabar baik: upah nominal yang lebih tinggi
3. kabar baik: harga bersih barang yang lebih rendah
The Effect of Trade Restricrions
Bagaimana penyediaan infrastruktur transportasi mempengaruhi konsentrasi perkotaan?
Apa peran politik dalam pembangunan kota-kota utama besar?
The Role of Infrastructure and Polotics
The net price of a retail product is the sum of its price and consuumer travel cost
The size of a firm`s market area depend on output per firm, per capita demand, and population density. The market area increases as
a. Output per firm increases.b. Per capita demand decreases.c. Population density decreases.
Summary
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