Demand in Space: Some Neglected Aspects
Year: 1971
Type: article
Abstract: This paper delves into a more explicit analysis of demand in space than has been undertaken heretofore. Utility theory is used to develop the concepts of spatial income-distribution effect, spatial-induced income effect, and spatial substitution effect, the effects on demand of changes or differences in location. Indifference curve analysis is employed to give a graphical interpretation to these concepts. The use of this general approach to demand in space makes it apparent that the usual assumption of uniform partial demand curves is logically inconsistent in a spatial context. An assumption of spatial homogeneity of general demand functions and of income distribution is found to imply (1) generally nonidentical partial demand curves at different points in space, and thus that the existence of the demand cone requires special conditions, (2) cases where purchases may rise with increasing distance from the mill, (3) the lack of independence among the ranges of different goods, and (4) nonuniformity in the size of ranges for a given good (a) sold at different centers and (b) sold in different directions from one center. Further work on this topic is indicated along the lines of loosening the many restrictions imposed during the analysis. Two-dimensional rather than the linear markets, discriminatory f.o.b. or equalized delivered pricing rather than nondiscriminatory f.o.b. pricing, and a transportation system with limited rather than ubiquitous access are some cases in point.
DOI: 10.1007/bf01954599
Author: Wesley H. Long
Institution: Pennsylvania State University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $2,740
OpenAlex ID: W2075444074