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Retail Agglomeration and Competition Externalities: Evidence from Openings and Closings of Multiline Department Stores in the US

Listed author(s):
  • John M. Clapp

    (University of Connecticut)

  • Stephen L. Ross

    (University of Connecticut)

  • Tingyu Zhou

    (Concordia University)

From the perspective of an existing retailer, the optimal size of a cluster of retail activity represents a trade-off between the marginal increases in consumer attraction from another store against the depletion of the customer base caused by an additional competitor. We estimate opening and closing probabilities of multi-line department stores (“anchors”) as a function of pre-existing anchors by type of anchor store (low-priced, mid-priced or high-priced) using a bias corrected probit model with county and year fixed effects. We find strong negative competitive effects of an additional same type but no effect on openings of anchors of another type.

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File URL: http://web2.uconn.edu/economics/working/2015-04.pdf
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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2015-04.

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Length: 53 pages
Date of creation: Apr 2015
Handle: RePEc:uct:uconnp:2015-04
Note: Stephen Ross is the corresponding author
Contact details of provider: Postal:
University of Connecticut 365 Fairfield Way, Unit 1063 Storrs, CT 06269-1063

Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/

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