Central place and Bid-rent theories

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Central place and Bid-rent theories

Christaller's central place theory basically tells us that if there is an even distribution of population, all with equal money and transport opportunities, and the land is flat and featureless, then settlements will follow a distribution pattern according to size. The distribution will follow one of three patterns:

1. Market Optimising:

The shoppers in smaller settlements divide into three equal groups when shopping in the three nearest larger settlements.

Market optimising

2. Transport Optimising:

Shoppers in smaller settlements divide into two equal groups when shopping in the two nearest larger settlements.

Transport optimising

3. Administration Optimising:

All shoppers in the smaller settlements shop in the nearest large settlement.

Administration optimising

The largest settlement, which is in the centre of the hexagon, will be surrounded by a number of smaller settlements. People from the small settlements will visit the large settlement for a particular good or service that their village does not provide. People cannot cross the boundary hexagons because Cristaller says they must shop in their nearest central place.

He also introduced the concepts of threshold and range:

Threshold is the minimum number of people needed to support a service.

Range is the maximum distance people are prepared to travel to purchase a good or service.

In order to have a good understanding of the way urban areas are likely to grow, it is important to have an understanding of Bid-rent theory.

The diagram below shows what various land-users are prepared and able to pay for good access to the CBD:

Bid-rent theory

It can be seen that commerce (in particular large department stores/chain stores) is willing to pay the greatest rent to be located in the CBD. The CBD is very valuable for them because it is traditionally the most accessible location for a large population. This large population is essential for department stores, which require a considerable turnover. As a result, they are willing and able to pay a very high land rent value. They maximise the potential of their site by building many stories.

As you move from the CBD, commerce is unwilling to pay as much for a site. In fact, what they are willing to pay declines rapidly.

Industry is, however, willing to pay to be on the outskirts of the CBD. There is more land available for their factories, but they still have many of the benefits of the CBD, such as a market place and good communications.

As you move further out, so the land is less attractive to industry and the householder is able to purchase land. The further you go from the CBD, the cheaper the land. This is why inner city areas are very densely populated (terraces, flats and high rises), whilst the suburbs and rural areas are sparsely populated (semi and detached houses with gardens).

Inner city and suburban

This bid-rent theory explains one pattern of urban land-use that is also identified by Burgess' concentric ring model.

The pattern is never as simple in reality. Today, out-of-town shopping centres and industrial sites have influenced the pattern.