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The location spectrum of an economic activity is the set of requirements enabling it to be profitable. Profit is simply defined as what an output (a product\ or a service) fetches on the market compared to the total costs of the inputs required to provide it. Therefore, each activity has

The location of major cities around the world is far from being random. Although cities have historically required an agricultural base for their support, the development of mechanized transport systems underlined three interdependent factors that played a substantial role in the location of cities.

The above figure represents different methods that can be applied in a GIS to estimate market areas. It considers a store (or any location offering a service) and its customer base. Buffer creation, a common GIS procedure, associates each concentric circle with a distance or a time value. They can

Huff’s retail model (1963) assumes that customers have a choice to patronize a location in view of other alternatives. Thus, a market area is expressed as a continuous probabilities line, unless there are no other alternative locations. The indifference point becomes the point of equal probability that a customer will

Reilly’s law of retail gravitation (1931) aims to find a point of indifference between two locations, so that the trading area of each can be determined. This point is assumed to be a function of the distance between two locations pondered by their respective size (population often used for this

Hotelling was one of the first to introduce the principle of spatial competition (1929) by investigating how sellers would choose locations along a linear market. He assumed that the product was uniform so customers would buy from the most convenient location (nearest seller) and that the friction of distance was

Even if located at the same location, different retail-based activities will draw a different customer base because of their size or function. Large stores tend to have a lower distance decay function as they offer a wider range of goods, often at lower prices (mainly due to economies of scale).

According to conventional economic theory market price is fixed by the following mechanism:

Under isotropic conditions, each market has the same polygonal evenly spaced area. This theoretical condition is rarely found in reality. The two most important non-isotropic conditions impacting the shape of market areas are differences in density (depicted here as concentric circles) and accessibility (depicted here as the presence of a