Do we go shopping downtown or in the 'burbs ?

Ushchev, Philip;Sloev, Igor;Thisse, Jacques-Francois
(2015) Journal of Urban Economics —

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Authors
  • Ushchev, PhilipNational Research University Higher School of Economics, Russia
    Author
  • Sloev, IgorNational Research University Higher School of Economics, Russia
    Author
  • Thisse, Jacques-FrancoisUCLouvain
    Author
Abstract
We combine spatial and monopolistic competition to study market interactions between downtown retailers and an outlying shopping mall. Consumers shop at either one 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 competition effect. Firms’ profits increase (decrease) with the entry of local competitors when the former (latter) dominates. Downtown retailers vanish swiftly 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.
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Ushchev, P., Sloev, I., & Thisse, J.-F. (2015). Do we go shopping downtown or in the ’burbs ? Journal of Urban Economics. https://doi.org/10.1016/j.jue.2014.10.001