Quality Differentiation and Spatial Clustering among Restaurants

Pascal Mossay, Jong Kook Shin and Grega Smrkolj

MPRA Paper from University Library of Munich, Germany

Abstract: To explore the relationship between spatial location and quality differentiation, we build a dataset of over 30,000 restaurants rated by TripAdvisor, across large UK cities. Whereas top-rated restaurants tend to locate closer to other top restaurants, bottom-rated restaurants tend to locate away from each other and closer to top ones. Our theoretical model can explain the main features of the observed spatial patterns. We find that an increase in the population density in the city center reduces the spatial dispersion of both top and bottom restaurants but the reduction is larger in magnitude for top restaurants. A larger quality difference between top and bottom restaurants increases both the absolute and relative dispersion of top restaurants.

Keywords: Spatial competition; Quality differentiation; Hotelling; Restaurant industry (search for similar items in EconPapers)
JEL-codes: L13 L83 R32 (search for similar items in EconPapers)
Date: 2020-02-18
New Economics Papers: this item is included in nep-geo, nep-ind and nep-ure
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https://mpra.ub.uni-muenchen.de/98707/1/MPRA_paper_98707.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/102557/1/MPRA_paper_102557.pdf revised version (application/pdf)

Related works:
Journal Article: Quality Differentiation and Spatial Clustering among Restaurants (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:98707

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