Central Place Theory is considered a normative economic model that explains the pattern of the distribution of cities.
The central place theory was based on some assumptions, as follow:

1. Many small sellers produce the same product;
2. Sellers are located on a Triangular Lattice;
3. Sellers are located on an isotropic and boundless plain;
4. The customer of the product pays the transportation cost;
5. There are economies of scale in production;
6. Homogeneous landscape.

The theory rests on the notion that centralization is a natural principle of order and that human settlements follow it. It is relied on two concepts:

• Threshold : minimum market needed
• Range : maximum distance consumers are prepared to travel to acquire goods

The result of these concepts is a system of centres of various sizes and importance over space. Each centre will supply particular types of goods, forming levels of hierarchy. High-order centres stock a wide array of goods and services; lower-order centres stock a smaller range of goods and services.

A Central Place is a place located in the centre of a market area and complementary regions are areas served by a central place. Those regions for the higher-order centres are large and overlap the small complementary regions of the lower-order centres. Christaller defined the centrality of an urban centre as the ratio between all the services provided there and the services needed just for its own residents.
In the functional hierarchies, generalizations can be made regarding the spacing, size and function of settlements:

1. The larger the settlements are in size, the fewer in numbers they will be;
2. The larger the settlements grow in size, the greater the distance between them;
3. As a settlement increases in size, the range and number of its functions will increase;
4. As a settlement increases in size, the number of higher-order services will also increase .

The validity of the central place theory may vary with local factors, such as climate, relief, history of development, technological improvement, personal preference of consumers and suppliers and economic status of consumers.

Example of Threshold and Range distribution. Stores make pure economic profit
(c) Lecture slides of Dr. J. Osleeb

The Central Place hierarchy
(c) Lecture slides of Dr. J. Osleeb