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Market potential: the measurement of domestic market size

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  • Fernando Bruna

    (Universidade da Coruña)

Abstract

Influenced by the concept of the strength of a force in physics, access to markets has since the 1940s been evaluated by indicators of ‘potential’, measured as a sum of a distance-weighted of population or market size of foreign or external territories. Later development of the New Economic Geography (NEG) by Paul Krugman did not solve the problem of calculating internal market size in a way that can be used to add it to calculations for external market potential. This paper analyzes the consequences of geometrical justifications in measuring internal market potential. For a sample of European regions, the paper concludes that the literature should be more explicit about historical processes of agglomeration and methods of calculating internal market size.

Suggested Citation

  • Fernando Bruna, 2024. "Market potential: the measurement of domestic market size," Letters in Spatial and Resource Sciences, Springer, vol. 17(1), pages 1-12, December.
    • Handle: RePEc:spr:lsprsc:v:17:y:2024:i:1:d:10.1007_s12076-024-00378-8
    DOI: 10.1007/s12076-024-00378-8
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    More about this item

    Keywords

    NEG; Agglomeration; Wage equation; Internal market potential; Internal distance; Self-potential;
    All these keywords.

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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