Abstract

Business and community leaders frequently question the population level necessary to provide adequate sales volume for a particular type of business. This study examines population levels associated with specified numbers of 16 business types in North Dakota towns between 200 and 10,000 population in 2000. The data used to identify the presence of particular types of businesses in a given community were records of sales and use tax permit holders by Standard Industrial Classification (SIC) group from the North Dakota State Tax Department. Threshold populations for the 16 business types were estimated using ordinary least squares (OLS) regression analysis. The resulting estimates indicate that the populations required to support various business types vary substantially. Businesses with relatively low population requirements included eating and drinking places. Department stores and variety stores had the highest population thresholds among the businesses studied. When the threshold estimates were compared with similar estimates for 1988, the threshold population to support one business had decreased for four business types (eating places, drinking places, farm supply, and drug stores), while for the other 12, the threshold populations had increased.

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