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Economy vs History - What Does Actually Determine the Distribution of Shops' Locations in Cities?

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  • Helge Sanner

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Abstract

This study examines in which cases economic forces or historical singularities prevail in the determination of the spatial distribution of retail shops. We develop a relatively general model of location choice in discrete space. The main force towards an agglomerated structure is the reduction of transaction costs for consumers if retailers are located closely, whilst competition and transport costs work towards a disperse structure. We assess the importance of the initial conditions by simulating the resulting distribution of shops for identical economic parameters but varying initial settings. If the equilibrium distributions are similar we conclude that economic forces have prevailed, while dissimilarity indicates that 'history' is more important. The (dis)similarity of distributions of shops is calculated by means of a metric measure.

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File URL: http://www-sre.wu-wien.ac.at/ersa/ersaconfs/ersa05/papers/175.pdf
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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa05p175.

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Date of creation: Aug 2005
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Handle: RePEc:wiw:wiwrsa:ersa05p175

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  1. Richard Arnott & Alex Anas & Kenneth Small, 1997. "Urban Spatial Structure," Boston College Working Papers in Economics 388., Boston College Department of Economics.
  2. Koeniger, Winfried & Licandro, Omar, 2004. "Substitutability and Competition in the Dixit-Stiglitz Model," IZA Discussion Papers 1007, Institute for the Study of Labor (IZA).
  3. 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.
  4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  5. Tjalling C. Koopmans & Martin J. Beckmann, 1955. "Assignment Problems and the Location of Economic Activities," Cowles Foundation Discussion Papers 4, Cowles Foundation for Research in Economics, Yale University.
  6. Capozza, Dennis R & Van Order, Robert, 1978. "A Generalized Model of Spatial Competition," American Economic Review, American Economic Association, vol. 68(5), pages 896-908, December.
  7. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, January.
  8. d'ASPREMONT, Claude & GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "On Hotelling's "Stability in competition"," CORE Discussion Papers RP -385, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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