Why retailers cluster: An agent model of location choice on supply chains
AbstractThis paper investigates the emergence of retail clusters on supply chains comprised of suppliers, retailers, and consumers. Agent-based models are employed to study retail location choice in a market of homogeneous goods and a market of complementary goods. On a circle comprised of discrete locales, retailers play a non-cooperative game by choosing locales to maximize profits which are impacted by their distance to consumers and to suppliers. Our findings disclose that in a market of homogeneous products symmetric distributions of retail clusters rise out of competition between individual retailers; average cluster density and cluster size change dynamically as retailers enter the market. In a market of two complementary goods, multiple equilibria of retail distributions are found to be common; a single cluster of retailers has the highest probability to emerge. Overall, our results show that retail clusters emerge from the balance between retailersâ€™ proximity to their customers, their competitors, their complements, and their suppliers.
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Bibliographic InfoPaper provided by University of Minnesota: Nexus Research Group in its series Working Papers with number 201105.
Date of creation: 2008
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retail clusters; agent-based model; location choice; distribution pattern;
Other versions of this item:
- Arthur Huang & David Levinson, 2011. "Why retailers cluster: an agent model of location choice on supply chains," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 38(1), pages 82-94, January.
- R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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