Central Place Theory

During mid-20th century, the law-making tradition in the Quantitative Revolution Phase was based on the concept of locational triads, which included the Central Place Theory, along with Von Thunen’s Agricultural Location Theory and Weber’s Industrial Location Theory. The development of models and theories for a detailed objective analysis in geography makes up the quantitative revolution phase.

This also aims to make geography one of the modern scientific disciplines. Central Place Theory uses a normative and deterministic approach to explain the distribution pattern of cities and towns around the world.

Historical Background

On observing the economic relationship between cities and their associated hinterlands in southern Germany, the German geographer Walter Christaller laid the foundation for the Central Place Theory in 1933. Later, to rectify some of the flaws found in Walter Christaller’s Theory, the German economist, August Losch propounded a modified version of the Central Place Theory in 1940.

Walter Christaller’s Theory

The Central place theory aims to suggest the best number of levels of urban hierarchy, the number of settlements in each hierarchy, their location and spacing, and the ideal shape of their area of influence under ideal conditions. The following are the assumptions made by Walter Christaller in his theory.

• There exists an isotropic plane, with an even distribution of natural resources.

• The Population is evenly distributed on the plane.

• The demand for goods and services is everywhere similar, provided with equal purchasing power of the consumers.

• A Perfect competition exists

• Single-mode transportation is used, where transportation cost is directly proportional to the distance.

• Consumers visit the nearest central place to minimize the travel distance

• Suppliers are economic people; whose motive is to maximize profit.

• The central place hierarchy acts as a closed system.

• The population of a central place depends on the availability of goods and services

• There must be a minimum number of central places operating within the system

Principles

There are some major principles underlying the central place theory: Centrality, Complementary area, Threshold population, range of goods/services, and the frictional effect of distance.

• Centrality − The centrality of a place describes its functional importance, and it provides goods and services for the population living in and around it

• Complementary area − The area for which the central place acts both as a complement and a focal point, known as the Complementary area.

• Threshold population − Threshold population is the minimum number of people needed to make a service viable at a particular place of importance.

• Range of goods/services − Range of a good is the maximum distance that a consumer is willing to travel to avail a product or a service. A consumer might not travel beyond this distance since it will outweigh the economic benefit he achieved.

• Frictional effect of distance − When the distance required for the purchase of a product or a service increase, the demand for it will gradually decrease.

Principle of Hierarchy

Walt Christaller has given the orders of hierarchy according to the population and services it provides. He considered the smallest unit as Hamlet, the intermediate one as town and the largest as the City/Metropolis. Higher order settlements offer more specialized goods and services, whereas lower-order settlements provide fewer goods and services.

Christaller's Hexagonal arrangement

To make the central place viable, the ideal resolution would be making the complementary area's population exactly equal to the threshold and the range is exactly equal to the radius of the complementary area. For perfect competition to exist, neither the owner nor the buyer would get any advantage. However, the circular shape of the market would result in either unserved or overserved areas.

Christaller suggested the shape of a hexagonal arrangement of markets to solve this problem. This will provide maximum coverage and won’t get the markets into the problem of overlapping areas or unserved areas.

Patterns in the arrangement of the Central Places

Christaller has given three principles for arranging the settlements in an orderly fashion and according to hierarchy. They are the marketing principle, the transport principle, and the administrative principle. He assumed a variable 'K' that denotes the sphere of influence that a central place possesses.

Marketing Principle (K=3)

It applies to the central place where the distribution of goods is entirely based on their range and there is a significant role for trading. Here, each higher order settlement gets 1/3 of the market area, and the equation goes as follows.

$$\mathrm{K\:=\:1\:+\:6(\:\frac{1}{3})\:=\:3}$$

Transport Principle (K=4)

The central places are located on the transport routes that connect them to the central place of higher order. This is arranged in such a way that the distance would reasonably be minimized to join the adjacent central places. Here, each higher order settlement serves 1/2 of the market area, and the equation goes as follows.

$$\mathrm{K\:=\:1\:+\:6(\:\frac{1}{2})\:=\:4}$$

Administrative Principle (K=7)

In this principle, the smaller order settlements are located entirely within the market area of larger settlement. The role of administration should be allotted to the higher order settlement for its efficiency. Here, the higher order place gets every part of the market area, and the equation goes as follows.

$$\mathrm{K\:=\:1\:+\:6(\:1)\:=\:7}$$

Criticism

• It is nearly impossible to have a flat, uniform terrain that has even distribution of natural resources.

• The Population is unevenly distributed, and their density is based on many socio-political and economic factors.

• The demand for goods and services is not the same everywhere in the real world.

• In the present world, multiple modes of transportation have been developed.

• Consumers do not necessarily visit the nearest marketplace at all times

• Many geographers think that the order and hierarchy of settlements cannot be applied to all regions.

• Christaller neglected the presence of a linear pattern as observed in railway lines where a hexagonal pattern is not applicable.

• Hans Bobeck claimed the Christaller's proof was unsatisfactory, stating the example of Germany. He observed that 2/3 of the population lives in the cities of Germany, but only 1/3 cities are really central places.

Walter Christaller inspired many scientists to modify his theory, of which August Losch is a significant one.

August Losch Model on Central Place

To make the Central Place theory more applicable to the real world, August Losch, the German economist, created a theoretical extension to the Christaller Model in his book 'De Raurnliche Ordnung der Wirtschaft'. He developed a general locational theory, emphasizing more on demand. He focused on the approach of profit maximization.

The main aim of the theory is to explain the shape and size of the market arranged in such a way that the profit would be maximum.

Like Christaller, August Losch also made assumptions, as listed below.

• There is an isotropic surface

• The goods and services are supplied in a constant manner.

• There is an even distribution of population.

• The demand is inversely proportional to the distance. Whenever the transportation cost increases, it results in an increase in the price of the goods/services that further leads to reduced demand for them.

• Entrepreneurs tend to behave like economic men and their main focus is to maximize profit.

Criticism

• Losch's theory is considered an abstract one.

• Problems occur due to the locational inter dependence of plants were left undealt.

• He overemphasized the demand factor.

• Using the profit maximization approach, locational equilibrium between the industry and the market rarely occurs.

• He failed to take into account some difficulties the entrepreneurs would encounter other than market demand.

Conclusion

Walter Christaller and August Losch, both of them arrived into the conclusion that the most efficient spatial arrangement of the central places would result in using the hexagonal urban pattern of market areas. Even today, both theories find applications in studying the location of retail in urban environments.

Frequently Asked Questions

What is Central Place Theory?

Central Place Theory is a spatial concept in economic geography that aims to explain the number, location, size, spacing, and functions of a settlement within an urban system. This theory attempts to reason out the distribution pattern of cities and towns around the world.

What is the meaning of "Threshold population"?

Threshold population is the minimum number of people needed to make a service viable at a particular place of importance.

What is the aim of the August Losch Theory?

The main aim of the theory is to explain the shape and size of the market arranged in such a way that the profit would be maximum.