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  • Richard Arnott

    ()
    (Department of Economics, University of California Riverside)

  • Yundong Tu

    ()
    (Department of Economics, University of California Riverside)

Abstract

The bulk of the literature on retail location looks at the topic from the perspective of either the retail firm or the individual shopper. Another branch of the literature examines the spatial distribution of retail activities within a city or region, drawing on either central place theory or the Lowry model, neither of which incorporates either markets or agglomeration economies. This paper looks at retail location from the perspective of a general equilibrium model of location and land use, with agglomeration economies in retailing. In particular, drawing on the Fujita-Ogawa (1982) model of non- monocentric cities, it develops a model of retail location, assuming that retail firms behave competitively, subject to spatial agglomeration economies. Locations are distinguished according to the effective variety of retail goods they offer. Shoppers are willing to pay more for goods at locations with greater effective variety, and in their choice of where to shop trade off retail price, product variety, and accessibility to home. Retail prices and land rents at different locations adjust to achieve spatial equilibrium.

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File URL: http://economics.ucr.edu/papers/papers08/08-11.pdf
File Function: First version, 2008
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Bibliographic Info

Paper provided by University of California at Riverside, Department of Economics in its series Working Papers with number 200811.

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Length: 38 pages
Date of creation: Aug 2008
Date of revision: Aug 2008
Handle: RePEc:ucr:wpaper:200811

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Related research

Keywords: retail; agglomeration; variety; land use;

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References

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  1. Eaton, B Curtis & Lipsey, Richard G, 1975. "The Principle of Minimum Differentiation Reconsidered: Some New Developments in the Theory of Spatial Competition," Review of Economic Studies, Wiley Blackwell, vol. 42(1), pages 27-49, January.
  2. Fujita, Masahisa, 1988. "A monopolistic competition model of spatial agglomeration : Differentiated product approach," Regional Science and Urban Economics, Elsevier, vol. 18(1), pages 87-124, February.
  3. Eaton, B Curtis & Lipsey, Richard G, 1982. "An Economic Theory of Central Places," Economic Journal, Royal Economic Society, vol. 92(365), pages 56-72, March.
  4. B. Curtis Eaton & Richard G. Lipsey, 1976. "Comparison Shopping and Clusters of Homogeneous Firms," Working Papers 226, Queen's University, Department of Economics.
  5. B. Curtis Eaton & Myrna Holtz Wooders, 1985. "Sophisticated Entry in a Model of Spatial Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 282-297, Summer.
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