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Quality Differentiation and Spatial Clustering among Restaurants

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  • Mossay, Pascal
  • Shin, Jong Kook
  • Smrkolj, Grega

Abstract

To explore the relationship between spatial location and quality differentiation, we build a dataset of over 30,000 restaurants rated by TripAdvisor, across large UK cities. Whereas top-rated restaurants tend to locate closer to other top restaurants, bottom-rated restaurants tend to locate away from each other and closer to top ones. Our theoretical model can explain the main features of the observed spatial patterns. We find that an increase in the population density in the city center reduces the spatial dispersion of both top and bottom restaurants but the reduction is larger in magnitude for top restaurants. A larger quality difference between top and bottom restaurants increases both the absolute and relative dispersion of top restaurants.

Suggested Citation

  • Mossay, Pascal & Shin, Jong Kook & Smrkolj, Grega, 2020. "Quality Differentiation and Spatial Clustering among Restaurants," MPRA Paper 98707, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:98707
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    References listed on IDEAS

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    Cited by:

    1. Li Tian & Xiaoyan Shen, 2024. "Spatial patterns and their influencing factors for China’s catering industry," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.

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    More about this item

    Keywords

    Spatial competition; Quality differentiation; Hotelling; Restaurant industry;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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