Demand-Threshold Estimation for Business Activities in Rural Saskatchewan

Historically, a common technique used to assess a community's ability to support various business activities has been demand-threshold estimation. The concept of a demand threshold has been applied at the community level by estimating a relationship between community population and the number of establishments of a particular kind in the community. The approach taken in this research incorporates a spatial dimension (community urban proximity) in addition to community population to estimate demand thresholds. Using a count data technique, demand thresholds are estimated for 27 different business activities found in 584 rural Saskatchewan communities in 1990. Both population and urban proximity are found to be important explanatory variables.