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Small, Local and Cheap? Walkable and Car-oriented Retail in Competition

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  • Frederick Guy

Abstract

I develop a model of competition between walkable shops, and other shops whose customers drive (car-oriented shops). Walkable shops operate in monopolistic competition within a local area, or neighbourhood. A small cost advantage for car-oriented shops can turn into a larger price advantage. High prices in walkable shops effect a regressive transfer from poorer to richer consumers, since the poorer are less likely to have cars. Internalizing environmental and social costs of urban automobile use could reduce prices and increase capacity utilization in walkable shops in more densely populated local areas. Many common combinations of planning and pricing tools fail to internalize important costs, and may actually subsidize driving to shop, but a combination of planning and the pricing (through taxation) of retail parking could effectively internalize the relevant costs.

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  • Frederick Guy, 2013. "Small, Local and Cheap? Walkable and Car-oriented Retail in Competition," Spatial Economic Analysis, Taylor & Francis Journals, vol. 8(4), pages 425-442, February.
    • Handle: RePEc:taf:specan:v:8:y:2013:i:4:p:425-442
    DOI: 10.1080/17421772.2013.833344
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    1. Shaoling Chen & Susheng Wang & Haisheng Yang, 2015. "Spatial Competition and Interdependence in Strategic Decisions: Empirical Evidence from Franchising," Economic Geography, Clark University, vol. 91(2), pages 165-204, April.

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