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IntroductionIntroduction
Conceptual/Theoretical FrameworkConceptual/Theoretical Framework
Practice/Case studiesPractice/Case studies
RetailingRetailing
WholesalingWholesaling
Office sectorOffice sector
Tertiary and Quaternary SectorsTertiary and Quaternary Sectors
ConceptsConcepts
* * Primary:Primary: extraction or manipulation of extraction or manipulation of
natural resources to provide food, energynatural resources to provide food, energy
and raw materials.and raw materials.
* * Secondary:Secondary: processing of materials into processing of materials into
saleable products and nonsaleable residuals,saleable products and nonsaleable residuals,
increasing the value of commodities byincreasing the value of commodities by
changing their form.changing their form.
* * Tertiary:Tertiary: perform services directly to perform services directly to
consumer and/or indirectly to producer, consumer and/or indirectly to producer,
which often produce no tangible goods.which often produce no tangible goods.
* * QuaternaryQuaternary: economic activities that are: economic activities that are
concerned with acquiring (e.g. researchconcerned with acquiring (e.g. research
institute), processing (e.g. office managers),institute), processing (e.g. office managers),
or transmitting (e.g. media) knowledge.or transmitting (e.g. media) knowledge.
* * Quinary: Quinary: activities involving decision-makingactivities involving decision-making
Why tertiary and quaternary activitiesWhy tertiary and quaternary activities??
1919thth Century 19 Century 19thth~20~20th th 2020thth ~21 ~21thth
11stst Wave 2 Wave 2ndnd Wave 3 Wave 3rdrd Wave Wave
Pre-industrial Industrial Post-industrialPre-industrial Industrial Post-industrial
Services
Secondary
Primary
Services
Secondary
Primary
Services
Secondary
Primary
Reasons:Reasons:
* Technological advancements:* Technological advancements:
Technological TechnologicalTechnological Technological
Advances AdvancesAdvances Advances
* Economic: the Engel’s Law* Economic: the Engel’s Law
Primary Secondary Service Sector
- The Post-industrial Society- The Post-industrial Society
Daniel Bell, 1973. The coming of post-industrial SocietyDaniel Bell, 1973. The coming of post-industrial Society
* Characteristics of a post-industrial society as * Characteristics of a post-industrial society as
compared with the industrial societycompared with the industrial society
i. Dominance of the service sector/ white collar jobi. Dominance of the service sector/ white collar job
( manufacturing/ blue collar-industrial )( manufacturing/ blue collar-industrial )
( primary – pre-industrial )/Peasants( primary – pre-industrial )/Peasants
ii. Primacy of theoretical and instrumental knowledgeii. Primacy of theoretical and instrumental knowledge concomitant educational institutions concomitant educational institutions ( Economic growth, private enterprises )( Economic growth, private enterprises ) ( tradition, ritual, familial, non-economical )( tradition, ritual, familial, non-economical )
iii. Emphasis on consumption and leisureiii. Emphasis on consumption and leisure ( Materialist, production for production sale)( Materialist, production for production sale) ( ritual/ spiritual )( ritual/ spiritual )
iv. Democracy, liberal political idea, social welfare, iv. Democracy, liberal political idea, social welfare, state intervenestate intervene ( individual freedom and rights, laissez-faire)( individual freedom and rights, laissez-faire) ( authoritarian, monarchy )( authoritarian, monarchy )
Theory on the Location of Tertiary and Theory on the Location of Tertiary and Quaternary ActivitiesQuaternary Activities
IntroductionIntroduction
Central Place Theory: among citiesCentral Place Theory: among cities
Bid-rent Analysis: within cityBid-rent Analysis: within city
Quaternary Place TheoryQuaternary Place Theory
Central Place TheoryCentral Place Theory
Definition:Definition: - Central Place:- Central Place: Any place that produces a goods Any place that produces a goods
or serviceor service
- Central Place Theory:- Central Place Theory: A theoretical explanation A theoretical explanation
for the spatial distribution of different-sized cities. for the spatial distribution of different-sized cities.
It also explains how different types of services are It also explains how different types of services are
located in different sized settlements.located in different sized settlements.
Walter Christaller (1933) Walter Christaller (1933) Central Places in South GermanyCentral Places in South Germany
August Losch (1939) August Losch (1939) Economies of LocationEconomies of Location
- - Questions:Questions: why and how are different types of why and how are different types of services location in different sized settlements?services location in different sized settlements?
- Assumptions: - Assumptions: Isotropic surfaceIsotropic surface: infinite, flat plain that is not disturbed : infinite, flat plain that is not disturbed
by topographical features, no mountains, no by topographical features, no mountains, no ocean, no river.ocean, no river.
Ubiquitous transport servicesUbiquitous transport services: transport services are : transport services are found everywhere.found everywhere.
Transport cost increases as a function of distanceTransport cost increases as a function of distanceDistance minimizationDistance minimizationEven distribution of consumersEven distribution of consumersPerfect market competitionPerfect market competitionAll consumers must be served.All consumers must be served.
Constructing the theoryConstructing the theory
1)1) One good/service with one producer/sellerOne good/service with one producer/seller
= += +
Cost CostCost Cost
Distance QuantityDistance Quantity
DemandedDemanded
Cost the consumerhas to pay
Cost at the point of production
Cost of travelling to the store
Cost at point of
production
high
low
highlow
Quantity DemandedQuantity Demanded
DistanceDistance
RangeRange RangeRange Threshold Threshold
Distance
Q
* * RangeRange: the farthest distance: the farthest distance
a consumer is willing to a consumer is willing to
travel to obtain a giventravel to obtain a given
good/ servicegood/ service
* * ThresholdThreshold: the minimum market: the minimum market
(distance/ population) the seller must sell to in (distance/ population) the seller must sell to in order to make a minimum level of profits to order to make a minimum level of profits to stay in businessstay in business
R
Range Threshold
i)i) RangeRange/ / ThresholdThreshold
Low Low High High(inexpensive, (expensive,(inexpensive, (expensive,
Cheap,Cheap, infrequently infrequently purchased)purchased)
frequently used) e.g. cars, jewelleryfrequently used) e.g. cars, jewellery
e.g. salt, sugare.g. salt, sugar
milk, breadmilk, bread
Low-order goods High-order goodsLow-order goods High-order goods
iiii) ) RangeRange VS. VS. ThresholdThreshold::
Range - Threshold = profit surplusRange - Threshold = profit surplus
Range > Threshold : Surplus → competition of new storeRange > Threshold : Surplus → competition of new store
Range < Threshold: bankruptcyRange < Threshold: bankruptcy
Range = Threshold: balanceRange = Threshold: balance
2. One good/ service with many producers/ sellers2. One good/ service with many producers/ sellers
incomplete coverageoverlapping ideal market shape
3) Many goods/ services with many producers/sellers3) Many goods/ services with many producers/sellers
* Low-order goods in low-order central places with * Low-order goods in low-order central places with small market areas.small market areas.
High-order goods in high-order central places with High-order goods in high-order central places with large market areas.large market areas.
* A hierarchy of central places organized by the K * A hierarchy of central places organized by the K principles.principles.
K PrincipleK Principle: refers to the number of hexagonal market : refers to the number of hexagonal market areas of one order that are contained within the areas of one order that are contained within the hexagonal market area of the next higher order.hexagonal market area of the next higher order.
Bid-Rent AnalysisBid-Rent Analysis
* William Alonso (1960) * William Alonso (1960) Location and Land UseLocation and Land Use* Q: How are service activities located within the city?* Q: How are service activities located within the city? A: determined by land rent.A: determined by land rent.- Assumptions:- Assumptions:Land use arrangement shaped by economic forcesLand use arrangement shaped by economic forcesFree market competition for landFree market competition for landLand value/ rent decreases from the center to the suburb.Land value/ rent decreases from the center to the suburb.
Dist.CBD
$Rent
- Bid-Rent CurvesBid-Rent Curves::
A set of land rents that an individual would A set of land rents that an individual would pay at various distance from the CBD in order pay at various distance from the CBD in order to maintain a minimum level of profits.to maintain a minimum level of profits.
- Argument: Land will be distributed to those - Argument: Land will be distributed to those activities that need it and are able to pay for it.activities that need it and are able to pay for it.
CBD →
$Rent
Distance
CommComm..
ManufManuf..
Res.Res.
Agri.Agri.
$ Rent
Comm.
Manuf.
Res.
Agri.
CBD Distance
Figure 11.23 Generalized urban land use patternFigure 11.23 Generalized urban land use pattern
$ Rent
CBD Distance
High order
Low order
CBD Distance
$ RentDept.Store
clothing
jewellery
furniture
groceries
Quaternary Place TheoryQuaternary Place Theory
- Primary: Von Thunen’s Agricultural Land Use- Primary: Von Thunen’s Agricultural Land Use
- Secondary : Weber’s Industrial Location- Secondary : Weber’s Industrial Location
- Tertiary: Christaller’s Central Place- Tertiary: Christaller’s Central Place
- Quaternary: Control/ Production Functions- Quaternary: Control/ Production Functions
* A theory that explains the size, number and * A theory that explains the size, number and spatial distribution of decision-making centers, spatial distribution of decision-making centers, command/ control points, and how systems of command/ control points, and how systems of these centers evolve into a spatial decision-these centers evolve into a spatial decision-making landscape.making landscape.
Question:Question:
Relationship between the control function and Relationship between the control function and
the production and the geography of the production and the geography of
corporations.corporations.
* Definition:* Definition:
* * Control FunctionControl Function: associated with white collar : associated with white collar management whose task was making decisions management whose task was making decisions by drawing upon intangible knowledge and by drawing upon intangible knowledge and informationinformation
* * Production FunctionProduction Function: associated with blue : associated with blue collar workers whose task was to manufacture collar workers whose task was to manufacture output by drawing upon tangible inputs.output by drawing upon tangible inputs.
* Changing Mechanism: 3 stages* Changing Mechanism: 3 stages
Stage I: Before the WarStage I: Before the War
- single capitalist/ family → corporation- single capitalist/ family → corporation
- separated control function from production - separated control function from production
functionfunction
Control/ production functions in the same cityControl/ production functions in the same city
Stage II: After World War IIStage II: After World War II
I. Horizontal Integration: a process whereby firms I. Horizontal Integration: a process whereby firms in the same sector merged together to make in the same sector merged together to make the corporation larger.the corporation larger.
Corporate Corporate
Head office Head office
Larger corporations moved to large citiesLarger corporations moved to large cities
MarketingLocation analysis
Accounting Advertisement R &D
II. Vertical Integration: a process whereby firms II. Vertical Integration: a process whereby firms take over all sectors that contribute to the take over all sectors that contribute to the production of their output: from extraction of production of their output: from extraction of raw materials to R&D.raw materials to R&D.
Production Production
Head Office
Regional Office
Factories
Major City
Minor City
Production Site
Stage III: Post-1973 oil crisisStage III: Post-1973 oil crisis
Internationalization of capital investment and manufactureInternationalization of capital investment and manufactureMulti-National corporations (MNCs)Multi-National corporations (MNCs)
““electronic highways”electronic highways”““Wired cities”Wired cities”
Head Office
Regional Office
Factories
World Cities
Low-order Cities
Scattered across the globe
Summary:Summary:- Key question: why control functions of a firm Key question: why control functions of a firm
are located where they are?are located where they are?
1920s: same city1920s: same city- 3 Stages after WWII: vertical/ horizontal 3 Stages after WWII: vertical/ horizontal
integration integration large citieslarge cities post-1973: dispersed across the post-1973: dispersed across the
globe globe