Shopping externalities and retail concentration: Evidence from dutch shopping streets

Hans Koster, Ilias Pasidis and Jos van Ommeren ()

Journal of Urban Economics, 2019, vol. 114, issue C

Abstract: Why do shops cluster in shopping streets? We argue that retail firms benefit from shopping externalities. We identify these externalities for the main Dutch shopping streets by estimating the effect of footfall – the number of pedestrians that pass by – and the number of shops in the vicinity on store owners’ rental income. We address endogeneity issues by exploiting spatial variation within shopping streets combined with historic long-lagged instruments. Our estimates imply an elasticity of rental income with respect to footfall as well as number of shops in the vicinity of (at least) 0.25. We show that these shopping externalities are unlikely to be internalised. It follows that substantial subsidies to shop owners are welfare improving, seemingly justifying current policies. Finally, we find limited evidence for heterogeneity between retail firms located in shopping streets in their willingness to pay for shopping externalities.

Keywords: Retail; Shopping externalities; Rents; Vacancies; Agglomeration economies; Footfall (search for similar items in EconPapers)
JEL-codes: L81 R30 R33 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Working Paper: Shopping externalities and retail concentration: Evidence from Dutch shopping streets (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:114:y:2019:i:c:s0094119019300713

DOI: 10.1016/j.jue.2019.103194

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