Aggregation of retail stores

✍ Scribed by Pablo Jensen; Jean Boisson; Hernán Larralde

• Book ID: 103879906
• Publisher: Elsevier Science
• Year: 2005
• Tongue: English
• Weight: 524 KB
• Volume: 351
• Category: Article
• ISSN: 0378-4371
• DOI: 10.1016/j.physa.2005.01.002

✦ Synopsis

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.