1. Economic Geography Services
AP HuG

2. Types of Services
Decide where your job goes and tape it (or use a magnet) up on the board under the correct heading
Not services
Consumer Services
Public Services
Business Services

3. Consumer Services Provide services to individual consumers
½ of all US jobs are consumer service jobs
4 main types
Retail/wholesale
Education (but not public school teachers)
Health & Social Services
Leisure/hospitality

4. Facilitate activities of other businesses ¼ of all US jobs
Business Services
Facilitate activities of other businesses
¼ of all US jobs
3 main types
Professional services
Financial services
Transportation & information

5. Public
10% of all US Jobs
Provide security and protection
Includes public school teachers

7. Deindustrialization Long term decline in industrial employment
Post –Industrial Status – more service sector jobs

8. US Job Sectors
1960
2010

9. Major characteristics of post Industrialization
High Urbanization
Dominance of service sector
Prevalence of Professionals and highly skilled specialists
Infrastructure based on information & communication networks
Knowledge based economy

10. Location Theories for Services

11. Services are market oriented, therefore. . . . . .

12. Harold Hotelling American Mathematician Economic statistics
famous for his Beach Story

13. Suppose that two owners of refreshment stands, George and Henry, are trying to decide where to locate along a stretch of beach. Suppose further that there are 100 customers located at even intervals along this beach, and that a customer will buy only from the closest vendor. Finally, assume that the beach is short enough so that total sales are independent of where the vendors locate.
Suppose that initially the vendors locate at points A and C in the illustration below. These locations would minimize the average traveling costs of the buyers and would result in each vendor getting one half of the business. However, this solution would not be an equilibrium. If George moved from point A to point B, he would keep all customers to his left and get some of Henry's customers. For similar reasons, Henry would move toward the center, and in equilibrium, both vendors would locate together in the middle.
Hotelling video

14. Your location should be influenced by competitors
Maximize your revenue

15. Growth Poles Cluster of firm conducting research
Usually related to the technology industry
Silicon Valley is an example of a growth pole – specifically a technopole

16. Christaller’s
Central Place theory

17. To identify the most profitable location for your consumer service
Purpose:
To identify the most profitable location for your consumer service

18. Central Place
Market center for exchange of good and service by people attracted from the surrounding area (that area is called the market area or hinterland)
Centrally located to maximize accessibility
Most people are likely to go to the nearest. .

19. Need to know the Range & Threshold
What is the market area?
Varies
Need to know the Range & Threshold

20. How far are you willing to travel for that service?
Range of a service
How far are you willing to travel for that service?
Pizza?
Doctor?
Concert?
Range

21. Sample Ranges
Mc Donald’s – 3 miles
Casual dining – 5 miles
Stadium – 60 miles

22. Threshold
Minimum number of people needed to support the service (potential customers)
Number depends on service – movies, thrift stores, amusement parks, nightclubs, malls appeal to different segments of society

23. Profitability of a location
Compute the range
Compute the threshold
Draw the market area

24. 4 levels of markets
Hamlets
Village
Small town
City

27. Rank Size Rule

28. Rank Size Rule:
The nth largest settlement is 1/n the population of the largest settlement
The 4th largest settlement is ¼ the population of the largest settlement

29. Does it work in the US? New York City 8.2 million Phoenix 1.4
San Antonio 1.3
Los Angeles 3.8 million
San Diego 1.25
Dallas 1.2
Chicago 2.8 million
San Jose .9
Houston 2.1 million
Philadelphia 1.5 million

30. How about in WA?
Seattle 608
Everett 103
Spokane 208
Kent 92
Tacoma 198
Yakima 91
Vancouver 161
Renton 90
Bellevue 122
Federal Way 89

31. Primate city Rule
If the country doesn’t follow the Rank Size rule, it may follow the primate city rule
Primate City – country’s largest city
Rule – the largest settlement has more than twice the population than the second ranking settlement