Spatial Definition of the Market.docx

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January 28, 2013 Spatial Definition of the Market (Demand & Cost Curve, Bid Rent) Supply, Demand and Geography - Distance  further you are away from a store, the less likely youre going to go to that storee - Accessibility  how to get there, follow pre-determined route - Attraction  consumers purchase things in a specific store, depending on how attractive the store is. Ambiance, personnel, etc. Demand Side - Demand curve o Price/unit sold  higher the price of the product, the less likely you are the sell it o Price+ travel costs/unit sold  combine price of product and cost of transportation - Complexities – spatial demand curve o Type of good  convenience (don’t have huge variation in price, etc) and shopping goods. (how often you buy a product) o Travel time  not necessarily the distance it takes to get from A to B, but also the length of time and the way of transportation. (traffic, routes, travel time, weather) o Travel patterns  depending on the daily activites. Ex. If mom has to drop gracy to swimming, and john to music o Density of settlement  difference between urban (retail tends to be set up as a strip) and suburban areas (density is lower, retail is more concentrated,) o Competition  can have an influence on retail even on convenience stores o Consumer characteristics  persons age, old/young/low income family have restrictions to where they travel Supply Side Cost curve – average cost per unit - Fixed (rent, insurance, mortgage – things that cannot fluctuate in cost) and variable cost (varies depending on volume of sales). Fixed costs are moving towards variable costs. Performance of the jobs – part time work  don’t get benefits and vacation time in retail economy. Seasonal jobs depend for employees  time of day and part time workers - Retail margin January 28, 2013 o % of selling price to overheads - Variability of product - Alternating cost curve o Fixed costs to variable costs - Combining cost & demand curves o Minimum market – threshold  wont make money, demand  highest threshold and make most money. Ex. Walmart would loose some money so they can remove some of their competitors. Average cost will not change – made up of fixed and variable costs. o Market range – profitability Bid Rent Curve - Location/accessibility  further you move away from the focal point it declines - Land values – starting of land use  cost of land, determines the use of the land. Closer to the market place the value is so high so there is high use of land use. Commercial activity occurs there since it is the most accessible place in the city. Since transportation is easy (taxi, busses) - Complication o Evolution of city  as city
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