ON THE SHAPE OF MARKET AREAS IN LÖSCHIAN SPATIAL MODELS*

ABSTRACT. The paper analyzes the lattice shape of equilibrium configurations of firms in spatial models. Lösch's assertion that free entry will result in hexagonal market areas is proved for a variety of assumptions about the nature of the market equilibrium, and about the preferences of customers. All the models considered, however, incorporate rational entry behavior and identify the stable lattice as an entry deterring equilibrium. A simple proof is presented of the optimality of hexagonal market areas, at least among regular space-filling configurations.