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Estimation of Minimum Market Threshold for Retail Commercial Sectors

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  • Kalyan Chakraborty

Abstract

Understanding the ability of a local market to support a particular type of establishment is a prerequisite to designing effective development strategies. While several factors contribute to the vitality of the local retail market, the most fundamental factor is the relative size of the market in terms of potential customers. A commonly applied technique to assess the ability of a community to support various business activities is the estimation of demand threshold using simple count data models. However, due to the presence of excessive zeros in the dependent variable, this study uses Hurdle Poisson and Zero Inflated Poisson (ZIP) count data models and estimates demand threshold for twelve retail commercial sectors for 2,201 counties in the U.S. The results show that the demographic characteristics of the county population and its remoteness are significant factors determining the number of establishments in a county. The results from this study may be used by local economic development practitioners and entrepreneurs to retain, promote, and attract retail commercial businesses in the local communities. Copyright International Atlantic Economic Society 2012

Suggested Citation

  • Kalyan Chakraborty, 2012. "Estimation of Minimum Market Threshold for Retail Commercial Sectors," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 18(3), pages 271-286, August.
    • Handle: RePEc:kap:iaecre:v:18:y:2012:i:3:p:271-286:10.1007/s11294-012-9354-3
    DOI: 10.1007/s11294-012-9354-3
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    Cited by:

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    3. Randall Akee & Elton Mykerezi & Richard M. Todd, 2017. "Reservation Employer Establishments: Data from the U.S. Census Longitudinal Business Database," Working Papers 17-57, Center for Economic Studies, U.S. Census Bureau.
    4. Van Sandt, Anders & Carpenter, Craig Wesley, "undated". "A Note on the Locational Determinants of the Agricultural Supply Chain," 2020 Annual Meeting, February 1-4, 2020, Louisville, Kentucky 302306, Southern Agricultural Economics Association.

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    More about this item

    Keywords

    Poisson; ZIP; Retail trade; Commercial; Threshold; Demand; R11; R32; D00;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
    • D00 - Microeconomics - - General - - - General

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