DEPARTMENT: GEOGRAPHY AND REGIONAL

PLANNING
COURSE CODE: GEO 316 (SETTLEMENT
GEOGRAPHY)
BY:
OSAZUWA SUNDAY OSAZE
Phone no. 2347039142270
Email Address. Osas2k13@gmail.com, omegga4u@yahoo.co.uk

DATE: 6TH MARCH, 2015.

ECONOMIC LOCATION THEORY

The economic theory was developed in 1953 by August Losch who was a German economist
who lived between the period of1906-1945. Losch based his theory on the modification of the
Walter Christallers central place theory.
Christaller central place theory seeks to explain the number, size and location of settlements
on the basis of a constant K (functional interdependence of settlement), but the economic
location theory is concerned with geographical location of economic activities and tries to
address the question of where economic activities are located, what and why . Losch model
focused on creating an ideal environment for consumers and maximizing consumer welfare, in
that the need to travel to receive goods was minimized and profit were held level rather than
been inflated to earn extra unlike the christaller model which led to a pattern where distribution
of goods and accumulation of profit was entirely dependent on transportation and location.

LOSCH ASSUMPTION
Losch on propounding this model made the following assumption while also modifying some
christaller assumption along the way. These include;

1. That the area is an isotropic plain. The area is flat and offers no barrier to movement of
people.
2. That there are identical preferences among the population where people will purchase
goods from the closest place possible.
3. That the population is evenly distributed along the plain.
4. That consumer of certain goods, pay cost of shipping of those goods.

Some of the modification he came up with from Walter Christaller work includes the
following;
1. While christaller assume that consumers are rational economic beings in which the
purchase goods from place of least distance but Losch assumed that people are not
always driven by low distance and economic advantage. This is because consumers
sometimes tend to buy costly items from big market or shops with more vegetation
regardless of the distance.
2. Christaller also assumed that there is homogeneity in availability of goods and services
i.e. the area has equal or an homogeneous environment in terms of resource supply and so
on while Losch assumed that not all settlement of same hierarchy have uniformity in
growth and services so the sphere of influence of different central place will also differ.
3. Christaller assumed that there is same sphere of influence for all gods and services and
each goods and services circulate within the same sphere of influence. Losch modified
this that sphere of influence of each goods and services also differs. For example a bakery
will attract only people who are nearby to the bakery but a car show room can attrack
people from nearby cities as well.
To explain his assumptions Losch made use of certain terms which he explained. The term
area as follows;
i.

ii.
iii.
iv.
v.
vi.

Supply Chain: This is a system of activities used to move a product or service from supplier
to consumer (through the shipping, selling, transporting and preserving of goods) that
transcend locational boundaries.
Shelf Life: The length of time that perishable food item can be preserved before they are
considered unsuitable for sales, use or consumption.
Threshold: This is the minimum market needed to sell a good or services.
Range: this is the maximum distance consumers are prepared to travel to reach a good or
services.
Spatial Margin Of Probability: this is the distance from a factory where cost are equal to
revenue (no profit or loss is made)
Variable Cost: These are expenses that change in proportion to business activity if a
manufacturer is in faraway, remote location, the price of transportation will increase with
high activity, production costs increase but revenue overcomes this cost.

vii.

viii.

Agglomeration: This is the clustering of people or activities. When factories are located in
developed metropolitan cities with high demand, income will increase as well as business.
This connectedness provides industries with early access to consumers and resources to
maximize profit.
Degglomeration: Industrial deconcentration in response to increasing costs or technical
advances due to competition.

HOW THE MODEL WORKS

The Losch model consists of super imposed hexagon in a pattern around a capital or central
city. The hexagon display the land around companies in order to determine at which location the
population would have the lowest cost and where these hexagons intersected, smaller locations
could be built in order to maximize the profit that each company received.
Losch chose hexagon over circle in his model because hexagon can tile a plane while circle
cannot. From any capital or large city a cone emanated from it and where two cones meet a
boundary where the population is in divided forms and the plane is then tiled according to this
intersection to show the regions in which a central city can create profit.
Losch model hexagon can only represent a product or demand at a time but in this case of
multiply demand more hexagons field can be constructed in a similar way to illustrate the
varying demand for a product.

LIMITATION OF THE MODEL

The model of economic location by Losch has been criticized on the following ground;
1. The Losch model has been criticized for assuming that the plane is isotropic in nature.
This is because it is not possible to see a land that that is the same over a wide area, say a
country, variation will surely exist between areas/regions within it.
2. The model can be criticized for assuming that every individual in the population has the
same preference in goods and services, human nature cannot be ascertained.
3. Another limitation among the model is that it assumed that population is evenly
distributed on the plain. The population of people in a region within a country cannot be
constant because of the varying level in the rate of birth, death and immigration and the
fertility level of the country.
4. The model assumed that consumers for some goods will pay for the shipping cost of the
goods but this is not true because producer in a bid to entice customers for their products
offer free shipping for products bought from them regardless of location with no
additional cost being paid.

ADVANTAGES OF THE MODEL

1. The Loschian model has been widely tested empirically worldwide where it has been
found application to the location of industries.
2. Unlike the Christaller model, the model wide range application for the location of agro
based industries to the location of specialized manufacturing industries.
3. The Loschians model just like Christaller model emphasize on the concept of centrality.

APPLICATION OF THE MODEL

The model has been applied in the creation of California Giant Berry Farms, a company based
out of Watsonville California.
Another example is central land on where multiple farms have been constructed throughout
the city as a result of a demand for trade.

G. W. SKINNER
The Skinner model was based on the rural Chinese economic systems. The model was
developed by G. William Skinner 1964. Skinner borrowed from the work of Walter Christaller
and Johan Henrich Von Thunen to explain rural Chinese economic system and display the value
of such spatial theories in situation of their applications. After China was overtaken in 1949 by
the communist, a cultural revolution was started with the aim of changing the countrys
traditional rural society which has long been in existence into a modern socialistic utopia and by
the fall of 1958, the Chinese government instituted the great leap forward which was designed to
replace traditional villages with communes and placing government in charge of production,
marketing and distribution of goods
This effort failed and the government had to reintroduce another system which allowed things
to be the way it was with little modification.
The question the arise; why was the government modern plan unable to uproot the traditional
rural marketing system. And how does a traditional marking system evolve into a modern one.
Skinner posed these two questions to understanding not only Chinese traditional society but
all traditional society confronted with the same issue.
Skinner chose to study Chinese traditional marketing systems for a number of reasons which
include;

1. The first being the population of China. China has the highest population in the world
2. Chinese culture and social organization is the longest ever recorded and is unmatched
anywhere else.
3. The availability of economic data which the Chinese has been recording for over a
century before Skinner even studied it.
4. The effect of both external trade and internal political and economic upheaval provided
an opportunity to study the side effect of modernization on traditional market.
In creating this model Skinner adopted an aspect of Christallers model which emphasizes
economic hierarchy which focuses on higher level goods and services while the fringes are
devoid of the goods as distance increases towards the fringes. At the roof of the hierarchy of
economic activity in China is the village with the occupation of the dwellers mainly on
subsistence farming with their surplus product flowing upward to the next level of the hierarchy
which Skinner called the standard market town. The standard market town only have a limited
range of goods which are gotten from the supplies of the villages, merchant from the next level
of the hierarchy called the intermediate market town travel to and from standard market town. At
the top of the rural hierarchy was the central market which contains the most exclusive items
available (rare products).
One other observation Skinner made was that Chinese market was a periodic one and
marketers were mobile. Periodicity of the markets was due to the fact that rural producer first
produce the products before taking them to sell at the market which also benefits the merchant
who move around purchasing such products. The custom of the region may also affect this
periodicity of the market and the trade flow vertically through the hierarchy.
Settlement will be situated in this triangle formed by the hierarchy in a perfect triangular
lattice and as the market around them expands they will eventually meet the markets of other
settlement. If the settlements are spread evenly, and the marked boundaries are drawn halfway in
between each, a sense of hexagonal-shaped market will appear. Skinner put forward evidence to
show that there are 18 villages within each standard market formed by this process. The
communities that formed as the market merge to form a standard market are known as the
standard market communities. The communities are believed to have common lineage, dialects
even deities.
Skinner asserted that since standard and marketing communities are largely insular, the
cultural development distinctiveness as between marketing communities would appear
inevitable.

ASSUMPTIONS

1. Skinner noted that physiographic features such as river and topography constrained the
hierarchy of nested economic systems. The constrains apparently particularly significant
at the regional level. The magnitude of interregional transactions was insufficient to link
these regional systems of economic central places into a single integrated urban system.
2. In his later work, Skinner proposed that Chinese socio-economic history can be best
approached through the ups and downs of the physiographic macro regions. He sketched
the history of urbanization in the macro regions through the last two millennia and argued
against the use of other spatial units such as provinces or the empire in historical analysis
because he considered those mere administrative units which blurred the economic
systematic boundaries of the physiographic region.
3. Skinners criteria for the definition of micro regions assume the primary of economic and
physiographic factors.
4. He sees economic central functions as basic and other religious, political, social, and
cultural functions as dependent on them.
5. Research on the social and cultural construction of places in recent decades underscores
the inadequacy of such an understanding of the relationship between economics and
culture. Faure and Siu have shown that the spatial dimensions of human behaviour in
southern China cannot be adequately captured within the confines of the geo-economic
logic of transportation costs fundamental to central place theory

CRITICISM
The Skinners model has been criticized for certain reasons
1. Others have noted that Skinners model neglects or underestimates inter- and
superregional economic exchange;
2. Within Skinners model, political behaviour is limited to either administrative/
bureaucratic behaviour or non-bureaucratic local leadership in welfare operations. The
former fits into a strict hierarchical model of discrete administrative organization where
each lower-level unit is made to fit within one and only one higher-level unit and so
effectively controlled by the centre. The latter is in his analysis part of the marketing
structure and so brings elites of different types together in the teashops of the standard
and intermediate level marketing towns.
3. The central market towns that were absorbed within the jurisdictional structure also
become the scene for the intermingling and joint leadership of local government and
local elites. Missing within this picture is any consideration of communication and

exchange among elites resident in standard, intermediate, or central market towns that
were not adjacent within the hexagonal structures of the central place model of
marketing towns.

REFRENCES
1.
2.
3.
4.
5.

http:// forumias.com/discussion/2281/central-place-theory-losch/p1
http://www.csiss.org/classics/content/96
http://www.csiss.org/classics/content/67
http://en.m.wikipedia.org/wiki/G._william_skinner
http://prezi.com/ovgknb9ypxgx/loschsmodel/?_e_pi=7%2CPAGE_1D10%2C8864531838.

2015
OSAZUWA SUNDAY OSAZE