Ethnic Residential Concentration and the Protected Market Hypothesis

Abstract

The concept of a protected consumer market has been used to refer to the special, culturally based tastes of ethnic minorities that can only be served by co-ethnic businesses. We argue that residentially segregated ethnic enclaves are another form of protected market which arises under historically determined conjunctures of immigration patterns and urban economic development. Using 571 survey interviews with Asian and white shopkeepers and population data from three British cities, ue test six hypotheses regarding the determinants of a shopkeeper's proportion of ethnic minority (Asian) customers. Taken together, residential concentration and social distance factors account for 53 percent of the variation in customer composition, as the proportion of Asians residing in an area and the ethnicity of a shopkeeper are found to have strong and independent effects on customer mix. In some societies, ethnic enterprises depend heavily on the patronage of co-ethnics, at least in the early years of settlement. The explanation most