Do we go shopping downtown or in the `burbs? Why not both?
Jacques Thisse () and
Philip Ushchev ()
No 9604, CEPR Discussion Papers from C.E.P.R. Discussion Papers
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 effect generated by consumers seeking more opportunities, and the ccompetition effect. Firms' profits 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 efficient mall need not be regulated, whereas the regulator must restrict the size of a mall accommodating downtown retailers.
Keywords: monopolistic competition; retailers; shopping behavior; shopping mall; spatial comparison (search for similar items in EconPapers)
JEL-codes: D43 L81 R10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-ure
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Working Paper: Do we go shopping downtown or in the 'burbs? Why not both? (2014)
Working Paper: Do we go shopping downtown or in the ‘burbs’? Why not both? (2013)
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