Do We Go Shopping Downtown or in the Burbs? Why Not Both?

38 Pages Posted: 20 Aug 2013

See all articles by Igor Sloev

Igor Sloev

National Research University Higher School of Economics

Jacques-François Thisse

Catholic University of Louvain (UCL); Centre for Economic Policy Research (CEPR)

Philip Ushchev

HSE University

Date Written: August 2013

Abstract

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

JEL Classification: D43, L81, R10

Suggested Citation

Sloev, Igor and Thisse, Jacques-François and Ushchev, Philip, Do We Go Shopping Downtown or in the Burbs? Why Not Both? (August 2013). CEPR Discussion Paper No. DP9604, Available at SSRN: https://ssrn.com/abstract=2312979

Igor Sloev (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Jacques-François Thisse

Catholic University of Louvain (UCL) ( email )

Place des Doyens 1
Louvain-la-Neuve, 1348
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Philip Ushchev

HSE University ( email )

3a Kantemirovskaya St, room 405
123 Griboedov Canal Embankment, room 123
Saint-Petersburg, Saint Petersburg 191119
Russia

HOME PAGE: http://https://sites.google.com/site/philipushchev/

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