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Implications of Big Box Retail Location on Regional Profits, Consumer Utility, and Land Rents

  • Stater, Mark

    (Trinity College, Harford, CT)

  • Visser, Michael S.

    (Sonoma State U)

Registered author(s):

    This paper uses a monocentric city model to examine the effects of big box retailing on local retail prices, land values and utility. Relative to small local retailers, the big box offers a price discount that increases in its marginal cost advantage. Big box entry reduces local retail prices and profits, but provides an increase in household utility that depends positively on the distance between the big box location and the CBD. However, big box locations are unstable with imperfectly competitive land markets, as developers and local governments have incentives to entice big boxes to switch locations.

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    Article provided by Southern Regional Science Association in its journal Review of Regional Studies.

    Volume (Year): 38 (2008)
    Issue (Month): 1 ()
    Pages: 8-28

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    Handle: RePEc:rre:publsh:v:38:y:2008:i:1:p:8-28
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    1. Hicks, Michael J. & Wilburn, Kristy L., 2001. "The Regional Impact of Wal-Mart Entrance: A Panel Study of the Retail Trade Sector in West Virginia," The Review of Regional Studies, Southern Regional Science Association, vol. 31(3), pages 305-313, Winter.
    2. Scott Munroe, 2001. "Retail structural dynamics and the forces behind big-box retailing," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 35(3), pages 357-373.
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    4. Smith, Tony E & Zenou, Yves, 1997. "Dual Labour Markets, Urban Unemployment and Multicentric Cities," CEPR Discussion Papers 1566, C.E.P.R. Discussion Papers.
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    8. FUJITA, Masahisa & THISSE, Jacques-François & ZENOU, Yves, 1995. "On the Endogenous Formation of Secondary Employment Centers in a City," CORE Discussion Papers 1995063, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Rhee Hyok-Joo, 2004. "Environmental Externalities, Median Voters, and the Multicentric City," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 75-94.
    10. Berliant, Marcus & Konishi, Hideo, 2000. "The endogenous formation of a city: population agglomeration and marketplaces in a location-specific production economy," Regional Science and Urban Economics, Elsevier, vol. 30(3), pages 289-324, May.
    11. Ota, Mitsuru & Fujita, Masahisa, 1993. "Communication technologies and spatial organization of multi-unit firms in metropolitan areas," Regional Science and Urban Economics, Elsevier, vol. 23(6), pages 695-729, December.
    12. Hiroshi Ohta & Yan-Shu Lin & MasaK. Naito, 2005. "Spatial Perfect Competition: A Uniform Delivered Pricing Model," Pacific Economic Review, Wiley Blackwell, vol. 10(4), pages 407-420, December.
    13. Georgeanne M. Artz & Kenneth E. Stone, 2006. "Analyzing the Impact of Wal-Mart Supercenters on Local Food Store Sales," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(5), pages 1296-1303.
    14. Shin-Kun Peng & Takatoshi Tabuchi, 2007. "Erratum: Spatial Competition in Variety and Number of Stores," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(2), pages 537-537, 06.
    15. Fujita, Masahisa & Ogawa, Hideaki, 1982. "Multiple equilibria and structural transition of non-monocentric urban configurations," Regional Science and Urban Economics, Elsevier, vol. 12(2), pages 161-196, May.
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