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Retail Agglomeration and Competition Externalities: Evidence from Openings and Closings of Multiline Department Stores in the U.S

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  • John M. Clapp
  • Stephen L. Ross
  • Tingyu Zhou

Abstract

From the perspective of an existing retailer, the optimal size of a cluster of retail activity represents a trade-off between the marginal increases in consumer attraction from another store against the depletion of the customer base caused by an additional competitor. We estimate opening and closing probabilities of multi-line department stores (“anchors”) as a function of preexisting anchors by type of anchor store (low-priced, mid-priced, or high-priced) using a bias-corrected probit model with county and year fixed effects. We find strong negative competitive effects of an additional same type but no effect on openings of anchors of another type. Supplementary materials for this article are available online.

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  • John M. Clapp & Stephen L. Ross & Tingyu Zhou, 2019. "Retail Agglomeration and Competition Externalities: Evidence from Openings and Closings of Multiline Department Stores in the U.S," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(1), pages 81-96, January.
    • Handle: RePEc:taf:jnlbes:v:37:y:2019:i:1:p:81-96
    DOI: 10.1080/07350015.2016.1272460
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    1. Koster, Hans R.A. & Pasidis, Ilias & van Ommeren, Jos, 2019. "Shopping externalities and retail concentration: Evidence from dutch shopping streets," Journal of Urban Economics, Elsevier, vol. 114(C).

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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