Non, Marielle (2010): Isolation or joining a mall? On the location choice of competing shops.
Download (352kB) | Preview
I study the location choice of competing shops. A shop can either be isolated or join a mall. A fraction of consumers is uninformed about prices and incurs costs to travel between market places and to enter a shop. The equilibrium mall size is computed for several parameter values, showing that mall and isolated shops can coexist. Several effects play a role. Mall shops attract more consumers, but isolated shops set a higher maximum price. Moreover, numerical evaluations show that an increase in mall size decreases the average price level and increases the participation level of uninformed consumers.
|Item Type:||MPRA Paper|
|Original Title:||Isolation or joining a mall? On the location choice of competing shops|
|Keywords:||location choice; travel costs; pricing; consumer search|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief
|Depositing User:||Marielle C. Non|
|Date Deposited:||15. Jan 2010 14:06|
|Last Modified:||15. Feb 2013 23:08|
Baye, M.R. and Morgan, J. "Information gatekeepers on the internet and the competitiveness of homogenous product markets." American Economic Review, Vol. 91 (2001), pp. 454-474.
Dudey, M. "Competition by choice: the effect of consumer search on firm location decisions." American Economic Review, Vol. 80 (1990), pp. 1092-1104.
Dudey, M. "A note on consumer search, firm location choice, and welfare." Journal of Industrial Economics, Vol. 41 (1993), pp. 323-331.
Fischer, J.H. and Harrington, J.E. "Product variety and firm agglomeration." The RAND Journal of Economics, Vol. 27 (1996), pp. 281-309.
Gehrig, T. "Competing markets." European Economic Review, Vol. 42 (1998), pp. 277-310.
Hotelling, H. "Stability in competition." The Economic Journal, Vol. 39 (1929), pp. 41-57.
Janssen, M.C.W., Moraga-Gonzalez, J.L. and Wildenbeest, M.R. "Truly costly sequential search and oligopolistic pricing." International Journal of Industrial Organization, Vol. 23 (2005), pp. 451-466.
Janssen, M.C.W. and Parakhonyak, A. "Consumer search with costly recall." Discussion Paper no. 2008-002/1, Tinbergen Institute, Erasmus University Rotterdam, 2008.
Konishi, H. "Concentration of competing retail stores." Journal of Urban Economics, Vol. 58 (2005), pp. 488-512.
Stahl, D.O. "Oligopolistic pricing with sequential consumer search." American Economic Review, Vol. 79 (1989), pp. 700-712.
Stahl, K. "Differentiated products, consumer search, and locational oligopoly." Journal of Industrial Economics, Vol. 31 (1982), pp. 97-113.
Stahl, K. "Location and spatial pricing theory with nonconvex transportation cost schedules." The Bell Journal of Economics, Vol. 13 (1982), pp. 575-582.
Wolinsky, A. "Retail trade concentration due to consumers' imperfect information." The Bell Journal of Economics, Vol. 14 (1983), pp. 275-282.