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Do we go shopping downtown or in the ‘burbs’? Why not both?

  • USHCHEV, Philip


    (NRU-Higher School of Economics, Russia)

  • SLOEV, Igor


    (NRU-Higher School of Economics, Russia)

  • THISSE, Jacques-François


    (Université catholique de Louvain, CORE, Belgium)

  • ,

We combine spatial and monopolistic competition to study market interactions between downtown retailers and an outlying shopping mall. Consumers shop at either 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 swiftly vanish 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.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2013057.

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Date of creation: 25 Nov 2013
Date of revision:
Handle: RePEc:cor:louvco:2013057
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  18. repec:dau:papers:123456789/6313 is not listed on IDEAS
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