The Agglomeration-Differentiation Tradeoff in Spatial Location Choice

  title={The Agglomeration-Differentiation Tradeoff in Spatial Location Choice},
  author={Sumon M. Datta},
Retailers often co-locate spatially to draw consumers, even though it increases price competition. The paper develops a structural model of entry and location choice that isolates the agglomeration benefit of co-location, after controlling for pure differentiation rationales for colocation such as (1) high demand and/or low cost at the location; (2) zoning restrictions and (3) format differentiation that minimizes the need for spatial differentiation. We augment entry and location choice data… CONTINUE READING

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