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Anchor Stores

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Author Info
Hideo Konishi () (Boston College)
Michael Sandfort (U.S. Department of Justice)

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Abstract

Planned shopping malls usually have one or more department stores (anchor stores) and multiple specialized retail stores in each commodity category. This paper presents a model of shopping malls in which these two types of stores sell noncomplementary commodities. If anchor stores sell standard (riskless yet low-value) commodities and retail stores sell specialized (high variance yet high expected value) commodities, then each type of store may bene t from collocating with the other, even though the stores sell substitutable products. The underlying intuition is that the presence of each type of retailer enhances consumer traffic at the shopping mall, which benefits the retailer or retailers of the other type. Under some parametric restrictions, the value of this increased traffic more than offsets the loss in markups due to competition from additional sellers at the mall. In this case, it is in a land developer's interest to rent retail space in the mall to both types of retailers. A Tiebout-like argument explains the striking similarity in the composition of stores in planned shopping malls.

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File URL: http://fmwww.bc.edu/EC-P/WP516.pdf
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Publisher Info
Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 516.

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Length: 29 pages
Date of creation: 25 Oct 2001
Date of revision: 14 Nov 2002
Publication status: Published, Journal of Urban Economics, 53, 413-435.
Handle: RePEc:boc:bocoec:516

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Related research
Keywords: anchor store shopping mall taste uncertainty

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Find related papers by JEL classification:
L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
M31 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Marketing
M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Pashigian, B Peter & Gould, Eric D, 1998. "Internalizing Externalities: The Pricing of Space in Shopping Malls," Journal of Law & Economics, University of Chicago Press, vol. 41(1), pages 115-42, April.
  2. James E. Rauch, 1993. "Does History Matter Only When it Matters Little? The Case of City-Indu try Location," NBER Working Papers 4312, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Asher Wolinsky, 1983. "Retail Trade Concentration Due to Consumers' Imperfect Information," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 275-282, Spring. [Downloadable!] (restricted)
  4. Marc Dudey, 1988. "Competition by choice," International Finance Discussion Papers 327, Board of Governors of the Federal Reserve System (U.S.).
  5. Brueckner, Jan K, 1993. "Inter-store Externalities and Space Allocation in Shopping Centers," The Journal of Real Estate Finance and Economics, Springer, vol. 7(1), pages 5-16, July.
  6. Benjamin, John D. & Boyle, Glenn W. & Sirmans, C. F., 1992. "Price discrimination in shopping center leases," Journal of Urban Economics, Elsevier, vol. 32(3), pages 299-317, November. [Downloadable!] (restricted)
  7. Henderson, J V, 1974. "The Sizes and Types of Cities," American Economic Review, American Economic Association, vol. 64(4), pages 640-56, September. [Downloadable!] (restricted)
  8. Sonstelie, Jon C. & Portney, Paul R., 1978. "Profit maximizing communities and the theory of local public expenditure," Journal of Urban Economics, Elsevier, vol. 5(2), pages 263-277, April. [Downloadable!] (restricted)
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  10. Lal, Rajiv & Matutes, Carmen, 1994. "Retail Pricing and Advertising Strategies," Journal of Business, University of Chicago Press, vol. 67(3), pages 345-70, July. [Downloadable!] (restricted)
  11. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June. [Downloadable!] (restricted)
  12. Wooders, Myrna, 1978. "Equilibria, the core, and jurisdiction structures in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 18(2), pages 328-348, August. [Downloadable!] (restricted)
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  14. West, Douglas S, 1992. "An Empirical Analysis of Retail Chains and Shopping Center Similarity," Journal of Industrial Economics, Blackwell Publishing, vol. 40(2), pages 201-21, June. [Downloadable!] (restricted)
  15. Anderson, S.P. & Renault, R., 1997. "Pricing, Product Diversity and Search Costs: A Bertrand-Chamberlin-Diamond Model," Papers 97.481, Toulouse - GREMAQ.
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