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

Author

Listed:
  • Philip Ushchev

  • Igor Sloev
  • Jacques-Francois Thisse

Abstract

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 eff_x001B_ect generated by consumers seeking more opportunities, and the competition eff_x001B_ect. Firms' profi_x001C_ts 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 effi_x001E_cient mall need not be regulated, whereas the regulator must restrict the size of a mall accommodating downtown retailers.

Suggested Citation

  • Philip Ushchev & Igor Sloev & Jacques-Francois Thisse, 2014. "Do we go shopping downtown or in the 'burbs? Why not both?," ERSA conference papers ersa14p1262, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa14p1262
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    Cited by:

    1. Mona Kashiha & Jean-Claude Thill, 2016. "Spatial competition and contestability based on choice histories of consumers," Papers in Regional Science, Wiley Blackwell, vol. 95(4), pages 877-894, November.
    2. Brandão, António & Correia-da-Silva, João & Pinho, Joana, 2014. "Spatial competition between shopping centers," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 234-250.

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    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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