Isolation or joining a mall? On the location choice of competing shops

Marielle Non

MPRA Paper from University Library of Munich, Germany

Abstract: I study the location choice of competing shops. A shop can either be isolated or join a mall. A fraction of consumers is uninformed about prices and incurs costs to travel between market places and to enter a shop. The equilibrium mall size is computed for several parameter values, showing that mall and isolated shops can coexist. Several effects play a role. Mall shops attract more consumers, but isolated shops set a higher maximum price. Moreover, numerical evaluations show that an increase in mall size decreases the average price level and increases the participation level of uninformed consumers.

Keywords: location choice; travel costs; pricing; consumer search (search for similar items in EconPapers)
JEL-codes: D83 L11 L13 (search for similar items in EconPapers)
Date: 2010-01-15
New Economics Papers: this item is included in nep-com, nep-mic and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:20044

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