Why retailers cluster: An agent model of location choice on supply chains
This paper investigates the emergence of retail clusters on supply chains comprised of suppliers, retailers, and consumers. Agent-based models are employed to study retail location choice in a market of homogeneous goods and a market of complementary goods. On a circle comprised of discrete locales, retailers play a non-cooperative game by choosing locales to maximize profits which are impacted by their distance to consumers and to suppliers. Our findings disclose that in a market of homogeneous products symmetric distributions of retail clusters rise out of competition between individual retailers; average cluster density and cluster size change dynamically as retailers enter the market. In a market of two complementary goods, multiple equilibria of retail distributions are found to be common; a single cluster of retailers has the highest probability to emerge. Overall, our results show that retail clusters emerge from the balance between retailersâ€™ proximity to their customers, their competitors, their complements, and their suppliers.
|Date of creation:||2008|
|Date of revision:|
|Publication status:||Published in Environment and Planning b 38(1) pp. 82 - 94.|
|Contact details of provider:|| Postal: Dept. of Civil Engineering, 500 Pillsbury Drive SE, Minneapolis, MN 55455|
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