Aggregation of retail stores
Résumé
We propose a simple model to understand the economic factors that induce aggregation of
some businesses over small geographical regions. The model incorporates price competition
with neighboring stores, transportation costs and the satisfaction probability of finding the
desired product. We show that aggregation is more likely for stores selling expensive products
and/or stores carrying only a fraction of the business variety. We illustrate our model with
empirical data collected in the city of Lyon.
some businesses over small geographical regions. The model incorporates price competition
with neighboring stores, transportation costs and the satisfaction probability of finding the
desired product. We show that aggregation is more likely for stores selling expensive products
and/or stores carrying only a fraction of the business variety. We illustrate our model with
empirical data collected in the city of Lyon.
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