Shopping externalities and retail concentration:Evidence from dutch shopping streets

Why do shops cluster in shopping streets? We argue that retail firms benefit from shopping externalities. We identify these externalities for the main Dutch shopping streets by estimating the effect of footfall – the number of pedestrians that pass by – and the number of shops in the vicinity on store owners’ rental income. We address endogeneity issues by exploiting spatial variation within shopping streets combined with historic long-lagged instruments. Our estimates imply an elasticity of rental income with respect to footfall as well as number of shops in the vicinity of (at least) 0.25. We show that these shopping externalities are unlikely to be internalised. It follows that substantial subsidies to shop owners are welfare improving, seemingly justifying current policies. Finally, we find limited evidence for heterogeneity between retail firms located in shopping streets in their willingness to pay for shopping externalities

E-SHOPPING VERSUS CITY CENTRE SHOPPING: THE ROLE OF PERCEIVED CITY CENTRE ATTRACTIVENESS

The growing number of Internet users and the increasing volume of online sales gives rise to speculation about how e-shopping will affect shopping centres as we know them. Since shopping centres differ in terms of their appeal to consumers, we expect the impact of e-shopping on in-store shopping to decrease with increasing attractiveness of the latter. To test this proposition, we examined how perceived attractiveness of city centres influences the relation between city centre shopping and e-shopping for 3,200 Internet users in the Netherlands. Results showed that more than 20 per cent of the online buyers made fewer trips to the city centre and also made fewer purchases at city centre stores, due to e-shopping. However, the higher the perceived attractiveness of the city centre, both in terms of range and convenience of shopping and accessibility, the less Internet users are inclined to shop online and to replace city centre shopping with e-shopping. Copyright (c) 2007 by the Royal Dutch Geographical Society KNAG.