Econometrica: Aug, 1969, Volume 37, Issue 3

Welfare Implication and Evaluation of Buyers' Travel Inputs and Nonprice Offer Variations in Networks of Retail Food Stores

https://doi.org/0012-9682(196908)37:3<439:WIAEOB>2.0.CO;2-C
p. 439-456

Pinhas Zusman

In performing their distribution function, retailers ordinarily offer certain services related to the buying environment. The geographic layout of retail networks also determines the level of buyers' travel disutility. These services and costs are not subject to explicit pricing, and only indirect welfare evaluations of the system's performance are possible. In this paper, a spatial model of retailing is formulated with the objective of allowing indirect evaluations. The working of the model is illustrated by applying it to a system of retail food stores.