Demand‐Threshold Estimation for Business Activities in Rural Saskatchewan

Abstract

Historically, a common technique used to assess a community's ability to support various business activities has been demand-threshold estimation. The concept of a demand threshold has been applied at the community level by estimating a relationship between community population and the number of establishments of a particular kind in the community. The approach taken in this research incorporates a spatial dimension (community urban proximity) in addition to community population to estimate demand thresholds. Using a count data technique, demand thresholds are estimated for 27 different business activities found in 584 rural Saskatchewan communities in 1990. Both population and urban proximity are found to be important explanatory variables.

Defining frontier areas in the United States

“…Access to grocery stores, hospitals, and other types of public and private services increases sharply with place-size population across this range. Some variation in central-place services, not captured here, occurs among towns and villages with populations below 2500 (Wensley & Stabler, 1998). The Census Bureau does not define Urban Areas below the 2500 population threshold, making it difficult to extend this methodology to include the influence on service accessibility of smaller-sized places.…”

“…Remoteness and small population size have been linked with persistent population loss and outmigration (Albrecht, 1993;Cromartie, 1998;Partridge, Rickman, Ali, & Olfert, 2008b); an aging population and natural decrease (Johnson, 1993;Johnson & Rathge, 2006); low median earnings, low housing values, and poverty (Partridge & Rickman, 2008;Partridge, Rickman, Ali, & Olfert, 2009b); and loss of retail and wholesale trade (Adamchak, Bloomquist, Bausman, & Qureshi, 1999;Henderson, Kelly, & Taylor, 2000;Wensley & Stabler, 1998). Research findings and policy applications have been limited to some degree, because previous frontier classification schemes lacked sufficient geographic detail (often classifying counties rather than smaller units) to capture the varying impacts of low-population density and remoteness on well-being.…”

Central place theory and its reemergence in regional science

“…Polèse and Shearmur's industry breakdown tends to be on the basis of demand for specialized labor and market threshold effects (e.g.,Wensley and Stabler 1998;Shonkwiler and Harris 1993).5 Polèse et al (2007) find a similar pattern for Spain.…”

“…This call makes economic sense when there is a need to internalize spillovers and when there are network effects and economies of scale. In particular, the growing importance of agglomeration forces-as implied in Partridge et al (2008a,b) and Wu and Gopinath (2008)-along with rising industry threshold effects-suggest that rural areas have much to gain from working on regional basis with urban areas (Fox and Kumar 1965;Berry 1970;Wensley and Stabler 1998;Olfert and Stabler 1999;Partridge and Olfert 2011;Carruthers et al forthcoming;Castle et al 2011).…”

Integrating Regional Economic Development Analysis and Land Use Economics

“…CPT is adept at predicting the location of cities within urban systems, particularly in areas such as the North American Great Plains with traditionally high farm intensities (Fox and Kamur, 1965;Wensley and Stabler, 1998;Olfert and Stabler, 1999). CPT is useful in predicting the location of actual business and consumer services and their population thresholds.…”