Market areas are an important component of the spatial organization of a region. The above figure considers a simple region composed of three equidistant cities along an axis (1, 2, and 3). In example A, it is assumed that the three cities are of the same size and economic composition, which means that they have the same level of attractiveness or influence. Because of an implied linear friction of distance, the further away a location is from a city, the lower the level of influence.
Each city has a cone of influence that decreases with distance, and at some point, this influence becomes negligible. City 1 has an influence extending in both directions (for simplicity, this influence is displayed on only one axis), which overlaps with those of cities 2 and 3. At some point, the influence of the other two cities becomes higher than its own. Consequently, the market area (or area of influence) of city 1 is bounded by x and y, which are known to be points of indifference.
Market areas can vary in size for two main reasons:
- The first is because one city has more influence than others; a larger city.
- The second is because the friction of distance may not be uniform over a region, implying that some cities may be more accessible than others, better serviced by transportation.
In example B, city 1 is assumed to be more important than the two others, extending its market area from x to x’ and from y to y’. For example C, city 1 has a better level of accessibility (lower friction slope) than the two others, again extending its market area. Larger cities are usually more accessible, implying that both effects observed in B and C are playing.