Appendix Chapter 4

1. Appendix Chapter 4

2. Introduction • Why do cities differ in size and scope? • Model of firm location based on access to consumers • Ignore production costs

3. Characteristics of Region • Uniform population density • No shopping externalities (no one-stop shopping; no comparison shopping) • Ubiquitous inputs • Uniform demand for each product

4. Differences across products • Jewelry: Scale economies large relative to per-capita demand • 80,000 people to support each store • Single store serves entire region • Books: Scale economies moderate relative to per-capita demand • 20,000 people to support each store • Four stores serve the region • Pizza: Scale economies small relative to per-capita demand • 5,000 people to support each pizzeria • 16 pizzerias serve the region

7. Insights into Urban Hierarchy • Diversity in size & scope from differences in scale economies relative to per-capita demand • Small number of large cities and large number of small cities • Consumers travel to bigger cities, but not smaller cities of cities of same size

8. Limits of Central Place Theory • Focuses on location decisions based on access to consumers • Alternative: Location based on local inputs and agglomeration economies