Welfare Costs of Traditional Shopping

28 Pages Posted: 1 Apr 2021

See all articles by HAKAN YILMAZKUDAY

HAKAN YILMAZKUDAY

Florida International University (FIU) - Department of Economics

Date Written: March 9, 2021

Abstract

Using data on the number of visitors (identified according to the census block that they reside in) at the store level, this paper investigates the welfare costs of traditional shopping for the U.S. census blocks. The investigation is based on an economic model, where individuals living in census blocks decide on which store to shop from based on the corresponding shopping costs and idiosyncratic benefits. The implications of the model suggest that the welfare gains from removing bilateral shopping costs in percentage terms can be measured for each census block as the weighted average of log current bilateral distance measures between shopping stores and census blocks, where weights are the bilateral probabilities of individuals (living in certain census blocks) shopping at certain stores. The corresponding results show that the welfare gains from removing bilateral shopping costs is about 4% for the average census block, with a range between 0.021% and 18% across census blocks that is further connected to their demographic or socioeconomic characteristics.

Keywords: Store-Level Analysis, Census Block Groups, Shopping, Welfare

JEL Classification: L81, R13, R41

Suggested Citation

Yilmazkuday, Hakan, Welfare Costs of Traditional Shopping (March 9, 2021). Available at SSRN: https://ssrn.com/abstract=3801142 or http://dx.doi.org/10.2139/ssrn.3801142

Hakan Yilmazkuday (Contact Author)

Florida International University (FIU) - Department of Economics ( email )

11200 SW 8th Street
Miami, FL 33199
United States

HOME PAGE: http://faculty.fiu.edu/~hyilmazk/

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