Spatial competition between shopping centers
AbstractWe study competition between two shopping centers (department stores or shopping malls) located at the extremes of a linear city. In contrast with the existing literature, we do not restrict consumers to make all their purchases at a single place. We obtain this condition as an equilibrium result. In the case of competition between a shopping mall and a department store, we find that the shops at the mall, taken together, obtain a lower profit than the department store. However, the shops at the mall have no incentives to merge into a department store (both sides would lose). It is the department store that has incentives to separate itself into a shopping mall (both sides win).
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Bibliographic InfoPaper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 394.
Length: 29 pages
Date of creation: Dec 2010
Date of revision:
Retail organization; Multi-product firms; Horizontal differentiation; Hotelling model;
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