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Anchor stores

  • Konishi, Hideo
  • Sandfort, Michael T.

Planned shopping malls usually have one or more department stores (anchor stores) and multiple specialized retail stores in each commodity category. This paper presents a model of shopping malls in which these two types of stores sell noncomplementary commodities. If anchor stores sell standard (riskless yet low-value) commodities and retail stores sell specialized (high variance yet high expected value) commodities, then each type of store may bene t from collocating with the other, even though the stores sell substitutable products. The underlying intuition is that the presence of each type of retailer enhances consumer traffic at the shopping mall, which benefits the retailer or retailers of the other type. Under some parametric restrictions, the value of this increased traffic more than offsets the loss in markups due to competition from additional sellers at the mall. In this case, it is in a land developer's interest to rent retail space in the mall to both types of retailers. A Tiebout-like argument explains the striking similarity in the composition of stores in planned shopping malls.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 53 (2003)
Issue (Month): 3 (May)
Pages: 413-435

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Handle: RePEc:eee:juecon:v:53:y:2003:i:3:p:413-435
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