Ushchev, Philip Sloev, Igor Thisse, Jacques-Francois
Year of Publication:
54th Congress of the European Regional Science Association: "Regional development & globalisation: Best practices", 26-29 August 2014, St. Petersburg, Russia
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 eff_x001B_ect generated by consumers seeking more opportunities, and the competition eff_x001B_ect. Firms' profi_x001C_ts 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 effi_x001E_cient mall need not be regulated, whereas the regulator must restrict the size of a mall accommodating downtown retailers.