APL (Ajiken Power Lunch)

APL (Ajiken Power Lunch) is a lunchtime workshop open to public, including IDE staffs, visiting research fellows, IDEAS students, outside researchers and graduate students. This workshop provides a platform for presentation of any work in progress where we can discuss in either English or Japanese.

Those who would attend a seminar are asked to announce yourself to receptionists on your arrival at the IDE and to obtain APL Organizers' signature on your admission card after the seminar.

May 11, 2017. (Friday) 12：30-13：00

Institute of Developing Economies, Japan External Trade Organization C23 Meeting Room 　

Shopping externalities and retail concentration:Evidence from Dutch shopping streets

Why do shops agglomerate in shopping districts? According to theory, shops benefit from shopping externalities, generated by consumers' 'trip‐chaining' behaviour and lower search costs. We identify shopping externalities in the full population of main shopping streets of the Netherlands by estimating the effect of footfall – the daily number of pedestrians that pass by – on shop rents and vacancy rates, which together determine the store owner’s rental income. We address endogeneity issues by exploiting spatial differences of footfall between intersecting streets. Our estimates imply an elasticity of rental income with respect to footfall of 0.25. The shop's marginal benefit of a pedestrian passing by is € 0.004.

Our results imply substantial subsidies to either retail firms or store owners in main shopping streets. On average, a subsidy to store owners of 10 percent of the rent is welfare optimal, but the optimal subsidy to retail firms that generate above‐average footfall levels is substantially higher.

Hans Koster (APL External)

English