Explaining Size Differentiation of Business Service Centres

This paper assesses the differentiation between business centres in Britain using data on business location from the Census of Employment analysed at postcode district level. The paper uses a combination of micro-analytical, central place theory and interregional trade theory to argue that centres can be expected to be differentiated from each other in the form of a hierarchy. The paper uses a spatial interaction model to test various possible forms of hierarchy. A five-level hierarchy is demonstrated for national/international, regional, sub-regional and local centres, as well as sub-regional centres that are 'shadowed' by nearby regional centres. Whilst the paper is exploratory, so that we would not argue that any one centre is rigidly at any single position in the hierarchy, the paper strongly demonstrates the continued importance of urban hierarchy in business location.