A CONTEXTUAL THEORY OF RETAIL CENTRAL PLACES ON A LINEAR MARKET

ABSTRACT. This paper presents an initial version of a new theory of central places for retailing activities. Confined to a linear market and using the Contextual Theory of Demand to model consumer behavior, the model extends the economic theory of central places (Eaton and Lipsey, 1982). In its present form, the model specifies four parameters that control the spatial relationship between the locations of households and the equilibrium locations of central places: expenditure shares in consumption, transportation cost functions, storage costs by commodity, and capital costs of retailers. The locational equilibria of the model are optima when all costs are considered.