Market Profitability

A market area has a range and a threshold which are determining the profitability of the economic activity generating it. The threshold is the minimal market area an activity must have to stay in operation. It represents the spatial threshold of profitability where spatial attributes such as population density have an important influence in its assessment. The range is the effective market area of an activity. On graph A, activity p will be profitable since its threshold is inferior to its range R(A). On graph B, activity p is not profitable because its range is inferior to its threshold.

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