Estimation of Minimum Market Threshold for Retail Commercial Sectors

Kalyan Chakraborty

International Advances in Economic Research, 2012, vol. 18, issue 3, 286 pages

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

Keywords: Poisson; ZIP; Retail trade; Commercial; Threshold; Demand; R11; R32; D00 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s11294-012-9354-3

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