Explaining size differentiation of business service centres

Summary. This paper assesses the differen tiation between business cen tres in Britain using data on business location from the Census of Employment analysed at postcode district level. The paper uses a combination of m icro-analytica l, central place theory and interregional trade theory to argue that centres can be expected to be differen tiated from each other in the form of a hierarchy. The paper uses a spatial interactio n model to test variou s possib le forms of hierarchy. A ® ve-level hierarchy is demonstrated for national/international, regional, sub-regional and local centres, as well as sub-region al centres that are `shadowed ’ by nearby regional centres. Whilst the paper is exploratory, so that we would not argue that any one cen tre is rigid ly at any single position in the hierarchy, the paper strongly demonstrates the continued importance of urban hierarchy in business location. 1