Market areas and spatial competition Flashcards
1
Q
Tradable industry
A
- products/services are sold to other regional clients or foreign clients
- Local wage and input costs are important determinants
- transport cost => input/output or commuting costs
2
Q
Nontradable industry
A
- products/services are sold to local customers
- firm’s market size ad its volume are important considerations
- transport cost => probability of drawing customers
3
Q
Market area determinants
A
- lower prices will increase the market area (End of line lowers to new price)
- more efficient delivery will increase the market area (flattens V)
4
Q
High street benefits
A
- reduction of customers’ travel cost
- reduction of customers’ search cost (increased competition)
- increased footfall if ‘anchor’ is present e.g. cinema, transport hub
5
Q
High street drawbacks
A
Lack of coordination between:
- retailer mix and store sizes
- opening times
- appearance
- common services e.g. security and marketing
- selection of goods and services on offer
- parking
6
Q
Shopping centre benefits
A
- internalise sales externalities:
- implement the right retailer mix
- enforce standards on opening times and effort
- set rules regarding design and appearance
- security and cleaning
- marketing
- parking
(lease contract as a means of coordination)
7
Q
Ground rent description
A
- normal rent setup e.g. fixed monthly rent payments
8
Q
Ground rent owner’s incentives
A
- owner’s would accept the tenant who will pay the highest rent
- Tenants with little established reputation would be likely to pay high to take advantage of other tenants reputation
- Other well known tenants would get negative externalities as the tenant quality of the shopping centre would be adversely affected
9
Q
Overage rent description
A
Additional amount of rent that must be paid once sales reach a pre-determined target
10
Q
Overage rent owner’s incentives
A
- owner’s will accept tenants who can provide good synergy with other tenants, thereby maximising owner’s income
