Threshold population

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In microeconomics, a threshold population is the minimum number of people needed for a service to be worthwhile.

In economic geography, a threshold population is the minimum number of people necessary before a particular good or service can be provided in an area. The concept is equivalent to the "range" in central place theory and retailing, which delineates the market area of a central place for a particular good or service, and is dependent on the spatial distribution of population and the willingness of consumers to travel a given distance to purchase particular goods or services. [1]

Typically a low-order shop (such as a grocer or newsagent) may require only 800 or so customers, whereas a higher-order store such as Marks and Spencer or Waitrose may need a threshold of 70,000 to be profitable, and a university may need 350,000 to be viable. [2]

Thresholds may also be linked to the spending power of customers; this is most obvious in periodic markets in poor countries, where wages are so low that people can buy the goods or services only once in a while.

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The retail format influences the consumer's store choice and addresses the consumer's expectations. At its most basic level, a retail format is a simple marketplace, that is; a location where goods and services are exchanged. In some parts of the world, the retail sector is still dominated by small family-run stores, but large retail chains are increasingly dominating the sector, because they can exert considerable buying power and pass on the savings in the form of lower prices. Many of these large retail chains also produce their own private labels which compete alongside manufacturer brands. Considerable consolidation of retail stores has changed the retail landscape, transferring power away from wholesalers and into the hands of the large retail chains.


  1. Goodall, B. (1987) The Penguin Dictionary of Human Geography. London: Penguin.
  2. Tiscali encyclopedia Archived 2007-10-12 at the Wayback Machine