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To Pay or Not to Pay for Parking at Shopping Malls: A Rationale from the Perspective of Two-sided Markets

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A shopping mall is a meeting platform for retailers and their customers, and may therefore subsidise one particular market side. We consider suburban malls as competitive bottlenecks because shops are mainly opened up by retail chains which operate in many malls, but whose customers visit only one suburban mall so as to save transport costs. If the consumer-to-shop externality is larger than the shop-to-consumer externality, parking is subsidised and if customers generate high revenue, the mall operator will offer free parking to its visitors. This result is shown in a model where two malls compete for variety-loving customers.
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Document Type: Research Article

Publication date: July 1, 2018

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