IDEAS home Printed from https://ideas.repec.org/p/hhs/vtiwps/2007_002.html
   My bibliography  Save this paper

Economic evaluation of grocery store nets in cities - a model approach

Author

Listed:
  • Haraldsson, Mattias

    () (VTI)

  • Svensson, Tomas

    () (VTI)

Abstract

The rapid transformation of the grocery business in cities from small to larger units during the last decades has resulted in grocery store nets with fewer nodes. Cost reductions as well as cost increases associated with the structural change are present, with a poorly understood net effect. Earlier research indicates that retail trade is subject to an increasing-returns illusion when increasing consumer participation in performing the service reduces the amount of service actually performed by the firm. This is still to a large extent an unexplored issue of utmost policy relevance. In this paper a total cost model will be presented that focus on this research question. Its components, grocery prices in retailing and consumers transport cost functions are estimated from empirical data and derived from a specific spatial structure respectively. Our conclusion is that the increasing returns are not an illusion but due to external costs somewhat exaggerated. The costs associated with the transport and time use by consumers are more than well compensated by the scale economies related to larger stores. When the transport network is severely congested, however, we have a situation closer to the scenario with an increasing returns illusion. But we can clearly state that the structural change in grocery retailing is welfare enhancing when the capacity utilisation in the transportation system is balanced. From a policy perspective the results of this study clearly suggests that issues regarding local service should be an integral part of strategic urban transport planning. With infrastructure and transportation systems that enable easy and affordable access with cars in the city, a significant number of people will find it optimal to use large stores for grocery shopping. Restrictive policies at the more detailed level, currently applied in many countries, will clearly be ineffective since they are counteracted by forces released by more strategic choices.

Suggested Citation

  • Haraldsson, Mattias & Svensson, Tomas, 2007. "Economic evaluation of grocery store nets in cities - a model approach," Working Papers 2007:2, Swedish National Road & Transport Research Institute (VTI).
  • Handle: RePEc:hhs:vtiwps:2007_002
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    grocery stores; urban transport; increasing returns illusion; consumer transport costs;

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:vtiwps:2007_002. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mats Berggren). General contact details of provider: http://edirc.repec.org/data/tevtise.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.