The second assumption made by Christaller was that, whenever threshold purchasing power for a good is obtained at a central place, an entrepreneur will offer the good whenever demand for a good drops below threshold, the good will be no longer offered ( Hartshorn 1996). Such places gains importance on the regional level due its rarity that is very much applicable in the metropolitan city like Chicago which is a home of numerous banks, commercial, manufacturing and retail sectors. This concept of being preferential to a particular place is similar to the ‘principle of least effort’ by Zipf. The first states that consumers will always purchase from the closest central place that offers a particular good, wherein such central place becomes specialized with respect to particular good. Whereas Losch assumed that excess profits of entrepreneurs were inconsistent with the goal of consumer welfare maximization ( Hartshorn 1996).Ĭhristaller while drafting the central place theory, made two assumption of the human behavior. His approach had a rigid hierarchical arrangement of central places led to a condition in which entrepreneurs engaged in the distribution of particular goods or services could accumulate excess profits solely because of their location within the settlement fabric. He developed an economic theory to provide an explanation for the size, spacing, location and functional content of cities.
He further, describes two theories related to the topic of central place one done by the German geographer Walter Christaller and the other one by German regional economist August Losch.Ĭhristaller recognized the economic relationship between cities and their hinterlands. The city and its surrounding complementary region therefore constitute a mutually interdependent system and a symbiotic relationship. Truman Hartshorn in his text of ‘Central Place Theory’, states that the central place theory provides a conceptual mechanism for understanding the role of the city as a service center.
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