Parking as a loss leader at shopping malls

Fulya Yuksel Ersoy, Kevin Hasker and Eren Inci

Transportation Research Part B: Methodological, 2016, vol. 91, issue C, 98-112

Abstract: This paper investigates the pricing of malls in an environment where shoppers choose between a car and public transportation in getting to a suburban mall. The mall implicitly engages in mixed bundling; it sells goods bundled with parking to shoppers who come by car, and only goods to shoppers who come by public transportation. There are external costs of discomfort in public transportation due to crowdedness. Thus, shoppers using public transportation deter each other. The mall internalizes these external costs, much like a policy maker. To do so, it raises the sales price of the good and sets a parking fee less than parking’s marginal cost. Hence, parking is always a loss leader. Surprisingly, this pricing scheme is not necessarily distortionary.

Keywords: Bundling; Loss-leader pricing; Mode choice; Public transportation; Shopping mall parking (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (11)

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DOI: 10.1016/j.trb.2016.04.016

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