Location of retail stores in city center and outskirts under spatial price competition: Improvements in radial and ring roads

Abstract

Retail stores locate in both the center and the outskirts of most cities. Their locations can change with transportation improvements. This paper presents a spatial price competition model with central and outlying commercial areas. It illustrates the relationship between retail store location and transportation improvements. An improvement of a radial road connecting the city center and the outskirts contributes to commercial development in the central area. However, an improvement of a ring road in the outskirts does not always engender a decline in thenumber of stores in central commercial areas.