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Do we go shopping downtown or in the ‘burbs?

Author

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  • Ushchev, Philip
  • Sloev, Igor
  • Thisse, Jacques-François

Abstract

We combine spatial and monopolistic competition to study market interactions between downtown retailers and an outlying shopping mall. Consumers shop at either one marketplace or at both, and buy each variety in volume. The market solution stems from the interplay between the market expansion effect generated by consumers seeking more opportunities, and the competition effect. Firms’ profits increase (decrease) with the entry of local competitors when the former (latter) dominates. Downtown retailers vanish swiftly when the mall is large. A predatory but efficient mall need not be regulated, whereas the regulator must restrict the size of a mall accommodating downtown retailers.

Suggested Citation

  • Ushchev, Philip & Sloev, Igor & Thisse, Jacques-François, 2015. "Do we go shopping downtown or in the ‘burbs?," Journal of Urban Economics, Elsevier, vol. 85(C), pages 1-15.
  • Handle: RePEc:eee:juecon:v:85:y:2015:i:c:p:1-15
    DOI: 10.1016/j.jue.2014.10.001
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. De Borger, Bruno & Russo, Antonio, 2017. "The political economy of pricing car access to downtown commercial districts," Transportation Research Part B: Methodological, Elsevier, vol. 98(C), pages 76-93.
    2. Kishi, Akio & Kono, Tatsuhito, 2020. "Transportation Improvement and Hollowing-out of Urban Commercial Center: Do They Harm Consumer Welfare?," MPRA Paper 99247, University Library of Munich, Germany.
    3. Mona Kashiha & Jean-Claude Thill, 2016. "Spatial competition and contestability based on choice histories of consumers," Papers in Regional Science, Wiley Blackwell, vol. 95(4), pages 877-894, November.
    4. Sanchez-Vidal, Maria, 2019. "Retail shocks and city structure," LSE Research Online Documents on Economics 103394, London School of Economics and Political Science, LSE Library.
    5. Ioulia Ossokina & Coen Teulings & Jan Svitak, 2017. "The urban economics of retail," CPB Discussion Paper 352, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Malykhin, Nikita & Ushchev, Philip, 2018. "How market interactions shape the city structure," Regional Science and Urban Economics, Elsevier, vol. 71(C), pages 122-136.
    7. DE BORGER, Bruno & RUSSO, Antonio, 2015. "Lobbying and the political economy of pricing car access to downtown commercial districts," Working Papers 2015012, University of Antwerp, Faculty of Business and Economics.
    8. Ioulia Ossokina & Coen Teulings & Jan Svitak, 2017. "The urban economics of retail," CPB Discussion Paper 352.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Maria Sanchez Vidal, 2016. "Small shops for sale! The effects of big-box openings on grocery stores," Working Papers 2016/12, Institut d'Economia de Barcelona (IEB).
    10. Maria Sánchez-Vidal, 2019. "Retail Shocks and City Structure," CEP Discussion Papers dp1636, Centre for Economic Performance, LSE.

    More about this item

    Keywords

    Shopping behavior; Retailers; Shopping mall; Spatial competition; Monopolistic competition;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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