GGR252H1 Lecture Notes - Lecture 8: Postal Codes In Canada, Distance Decay

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16 Apr 2013
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The Converse Breakpoint method make it possible to predict the point
between two centres (E.g. Shopping centres) where the trading influence of
each is equal, we can think of this point as the point or line of indifference
(i.e. Where the utility of the two centres is equal). It sis also the market
boundary between the centres.
The method uses distance and size to calculate the line of indifference (i.e.
The market boundaries)
Converse Breakpoint Method
o Dy= (Dxy) /( 1+ sqrt (Ax/Ay)) - In textbook
o Dxy distance btwn x and y
o Ax attraction to X/Y
o Draw breakpoints at 90 degree angles
Technique
The converse formula requires data aon distance between centres and size of
centres. Together these two vairables are thought to adequently measure the
reative utility of the centres. The formula suggests that the utility of the
centre decreases with distance and increases with size
Size meansure could be : numbers of stores, square footage of the centre,
number of employees, number of parking spaces, etc.
The formula calculates the distance of the breakpoint ( line of indifference)
from the subject Centre
Assumptions
Unlike the Theisson polygon method the converse method does not assume
that all centres are equal in attractiveness (size). It does however have the
other unifying assumptions evident in the Theisson method ( fully informed
rational maximize)
Criticism
Again we will find possible weaknesses in the model in its unifying
assumptions, to what extent does the “real world” meet these assumptions?
Is a size measurement an effective surrogate measure of all aspects of image
in attraction? What about the ambiance and design of the centres?
In common with Theisson method the technique produces spatial monopoly
market areas, once the boundaries are established it is assumed that
everybody inside the boundaries shops at the subject centre) n reality we are
more likely to be dealing with overlapping market areas: yes there is a hgh
likelihood that consumers will shop at nearer larger centres but there is
always some possibility that they will shop at other centres. A more
sophisticated gravity model that addresses this concept of overlapping
markets in probability framework is the huff model we will now address
this method in detail.
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