Retail Trade Concentration Due to Consumers' Imperfect Information

Asher Wolinsky

Bell Journal of Economics, 1983, vol. 14, issue 1, pages 275-282

Abstract: The main idea of this article is that geographical concentration of stores selling similar products can be explained by consumers' imperfect information and their resulting need to search the market. A cluster of stores sustained by these forces is not necessarily located at the point that minimizes consumer transportation costs--a fact that distinguishes it from clustering phenomena which may be explained by Hotelling-type arguments. For the purposes of the analysis this article presents a model of monopolistic competition under imperfect information which could be of independent interest.

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