Arthur Huang David Levinson () (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
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This 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 retailers’ proximity to their customers, their competitors, their complements, and their suppliers.
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Publisher Info
Paper provided by University of Minnesota: Nexus Research Group in its series Working Papers with number
000056.
Length: Date of creation: 2008 Date of revision: Publication status: Published in working paper Handle: RePEc:nex:wpaper:retailpaper
Contact details of provider: Postal: Dept. of Civil Engineering, 500 Pillsbury Drive SE, Minneapolis, MN 55455 Phone: +01 (612) 625-6354 Fax: +01 (612) 626-7750 Web page: http://nexus.umn.edu More information through EDIRC
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Find related papers by JEL classification: R30 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - General L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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