When do Co‐located Firms Selling Identical Products Thrive?

Dan Bernhardt, Evangelos Constantinou, Mehdi Shadmehr

Research output: Contribution to journalArticlepeer-review


When consumers only see prices once they visit stores, and some consumers have time to comparison shop, co-location commits stores to compete and lower prices, which draws consumers away from isolated stores. Profits of co-located firms are a single-peaked function of the number of shoppers—co-located firms thrive when there are some shoppers, but not too many. When consumers know in advance whether they have time to shop, effects are enhanced: co-located stores may draw enough shoppers to drive the expected price paid by a non-shopper below that paid when consumers do not know if they will have time to shop.
Original languageEnglish (US)
Pages (from-to)565-590
Number of pages26
JournalJournal of Industrial Economics
Issue number3
Early online dateSep 15 2022
StatePublished - Sep 2022


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