Some Economic Extensions of Central-place Theory Involving Profit Maximisation

Abstract

This paper attempts to extend central-place theory in terms of economic analysis, while at the same time refining and enhancing its applicability to urban systems. After reviewing the approach of Christaller, a central-place system is constructed, based on profit maximisation, and it is demonstrated that firms tend to concentrate at the largest central place. Next, the economic rationale for triangular market areas is discussed, and a central-place system is derived which involves the combination of triangular and hexagonal market areas. This model is used to explain the observed number of central places. Finally, the integration or separation of production and sales facilities is incorporated into the theory, as an attempt to explain the diversity of central places within an urban system.