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Spatial competition between shopping centers

Author

Listed:
  • António Brandão

    (CEF.UP, Faculdade de Economia, Universidade do Porto)

  • João Correia-da-Silva

    (CEF.UP, Faculdade de Economia, Universidade do Porto)

  • Joana Pinho

    (Faculdade de Economia, Universidade do Porto)

Abstract

We study competition between two shopping centers (department stores or shopping malls) located at the extremes of a linear city. In contrast with the existing literature, we do not restrict consumers to make all their purchases at a single place. We obtain this condition as an equilibrium result. In the case of competition between a shopping mall and a department store, we find that the shops at the mall, taken together, obtain a lower profit than the department store. However, the shops at the mall have no incentives to merge into a department store (both sides would lose). It is the department store that has incentives to separate itself into a shopping mall (both sides win).

Suggested Citation

  • António Brandão & João Correia-da-Silva & Joana Pinho, 2010. "Spatial competition between shopping centers," FEP Working Papers 394, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:394
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    References listed on IDEAS

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    8. Méndez-Vogel, Gonzalo & Marianov, Vladimir & Lüer-Villagra, Armin & Eiselt, H.A., 2023. "Store location with multipurpose shopping trips and a new random utility customers’ choice model," European Journal of Operational Research, Elsevier, vol. 305(2), pages 708-721.

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    More about this item

    Keywords

    Retail organization; Multi-product firms; Horizontal differentiation; Hotelling model;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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