IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa13p9.html
   My bibliography  Save this paper

An analysis of the effects of the variety of items on the retailer's market areas and the urban system

Author

Listed:
  • Toshiharu Ishikawa

Abstract

Due to the reduction of the transportation cost, the retailers become to be able to deal with many kinds of goods and to increase the number of items stocked at the stores. Corresponding to the increase of items stocked at stores, the customers tend to increase to visit the retailer that provides the more varieties of goods. Hence, besides of the price of goods, the number of items at a store influences not only the retailer's profits and its market area situation. Firstly, this paper incorporates the number of items into the traditional market analyses and it examines the effects of the number of items at a store on the shape of the market area boundary and it shows how the increase of the number of items alters the market area boundary. Secondly, dividing the retailers' stores into the three categories, convenience store, supermarket store, and department store, the paper derives the number of items, the average price of the retailing goods and the market area of a retailer in spatial free-entry equilibrium. It is also shown in this analysis that in the category of the convenience stores, the number of items at a store decreases and it's the market area shrinks as the transportation costs reduce, while, in the categories of the supermarket stores and the department stores, the number of items at a store increases and their market areas expands due to the reduction of transportation costs. The fact that the reduction of the transportation costs expands the necessitated size of the market area for a retailer to survive in the market field is crucially important to the retailing structure of the urban system. Because the decreasing transportation costs expel some of department stores from the middle sized cities and thus damage the tertiary function of these cities. It causes the medium cities' economic activity decay. As a result, many urban systems become to be formed by one large city and many small cities. This obtained result is supported by an empirical analysis using the recent Japanese data. The conclusions derived in this paper seem to be worth studying by detail methods.

Suggested Citation

  • Toshiharu Ishikawa, 2013. "An analysis of the effects of the variety of items on the retailer's market areas and the urban system," ERSA conference papers ersa13p9, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa13p9
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa13/ERSA2013_paper_00009.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Shin‐Kun Peng & Takatoshi Tabuchi, 2007. "Spatial Competition in Variety and Number of Stores," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 227-250, March.
    2. William J. Baumol & Edward A. Ide, 1956. "Variety in Retailing," Management Science, INFORMS, vol. 3(1), pages 93-101, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrew Rhodes & Jidong Zhou, 2019. "Consumer Search and Retail Market Structure," Management Science, INFORMS, vol. 67(6), pages 2607-2623, June.
    2. Yi‐Ling Cheng & Takatoshi Tabuchi, 2018. "Multiproduct oligopoly and trade between asymmetric countries," Review of International Economics, Wiley Blackwell, vol. 26(3), pages 524-538, August.
    3. Kelemen, József, 2020. "Szimultán Hotelling-modell Cobb-Douglas-hasznosságfüggvénnyel [A simultaneous Hotelling model with a Cobb-Douglas utility function]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 14-30.
    4. Takatoshi Tabuchi, 2009. "Hotelling's Spatial Competition Reconsidered," CIRJE F-Series CIRJE-F-674, CIRJE, Faculty of Economics, University of Tokyo.
    5. repec:zbw:rwirep:0033 is not listed on IDEAS
    6. Mareike Sachse & Sebastian Oetzel & Daniel Klapper, 2023. "I'll Try That, Too - A Field Experiment in Retailing on the Effect of Variety During Display Promotions," Rationality and Competition Discussion Paper Series 404, CRC TRR 190 Rationality and Competition.
    7. Aydinli, Aylin & Gu, Yangjie & Pham, Michel Tuan, 2017. "An experience-utility explanation of the preference for larger assortments," International Journal of Research in Marketing, Elsevier, vol. 34(3), pages 746-760.
    8. Erik Brynjolfsson & Yu (Jeffrey) Hu & Michael D. Smith, 2003. "Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers," Management Science, INFORMS, vol. 49(11), pages 1580-1596, November.
    9. Trichy Krishan & Kitty Koelemeijer & Ram Rao, 2002. "Consistent Assortment Provision and Service Provision in a Retail Environment," Marketing Science, INFORMS, vol. 21(1), pages 54-73, April.
    10. Tim Brühn & Georg Götz, 2015. "Exclusionary Practices in Two-Sided Markets: The Effect of Radius Clauses on Competition Between Shopping Centers," MAGKS Papers on Economics 201518, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    11. Thai, Nguyen T. & Yuksel, Ulku, 2017. "Too many destinations to visit: Tourists’ dilemma?," Annals of Tourism Research, Elsevier, vol. 62(C), pages 38-53.
    12. Tom Fangyun Tan & Serguei Netessine & Lorin Hitt, 2017. "Is Tom Cruise Threatened? An Empirical Study of the Impact of Product Variety on Demand Concentration," Information Systems Research, INFORMS, vol. 28(3), pages 643-660, September.
    13. Shih-Ping Jeng, 2008. "Effects of corporate reputations, relationships and competing suppliers' marketing programmes on customers' cross-buying intentions," The Service Industries Journal, Taylor & Francis Journals, vol. 28(1), pages 15-26, January.
    14. Yan, Huan & Chang, En-Chung & Chou, Ting-Jui & Tang, Xiaofei, 2015. "The over-categorization effect: How the number of categorizations influences shoppers' perceptions of variety and satisfaction," Journal of Business Research, Elsevier, vol. 68(3), pages 631-638.
    15. Hans Corsten & Michael Hopf & Benedikt Kasper & Clemens Thielen, 2018. "Assortment planning for multiple chain stores," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 40(4), pages 875-912, October.
    16. Draganska, Michaela & Klapper, Daniel & Villas-Boas, Sofia B, 2008. "A Larger Slice or a Larger Pie? An Empirical Investigation of Bargaining Power in the Distribution Channel," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7v13q46w, Department of Agricultural & Resource Economics, UC Berkeley.
    17. repec:cup:judgdm:v:12:y:2017:i:3:p:198-207 is not listed on IDEAS
    18. Michaela Draganska & Daniel Klapper & Sofia B. Villas-Boas, 2010. "A Larger Slice or a Larger Pie? An Empirical Investigation of Bargaining Power in the Distribution Channel," Marketing Science, INFORMS, vol. 29(1), pages 57-74, 01-02.
    19. Sands, Sean & Maggioni, Isabella & Ferraro, Carla & Jebarajakirthy, Charles & Dharmesti, Maria, 2019. "The vice and virtue of on-the-go consumption: An exploratory segmentation," Journal of Retailing and Consumer Services, Elsevier, vol. 51(C), pages 399-408.
    20. repec:rre:publsh:v:38:y:2008:i:1:p:8-28 is not listed on IDEAS
    21. Karel H. van Donselaar & Vishal Gaur & Tom van Woensel & Rob A. C. M. Broekmeulen & Jan C. Fransoo, 2010. "Ordering Behavior in Retail Stores and Implications for Automated Replenishment," Management Science, INFORMS, vol. 56(5), pages 766-784, May.
    22. Wieland, Thomas, 2014. "Räumliches Einkaufsverhalten und Standortpolitik im Einzelhandel unter Berücksichtigung von Agglomerationseffekten: Theoretische Erklärungsansätze, modellanalytische Zugänge und eine empirisch-ökonome," MPRA Paper 77163, University Library of Munich, Germany.
    23. Nikolay Dragomirov, 2015. "Market-oriented Logistics in Bulgarian Trade and Manufacturing Enterprises," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 4, pages 60-71, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa13p9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.