Parking as a loss leader at shopping malls

Ersoy, Fulya Yüksel and Hasker, Kevin and İnci, Eren (2016) Parking as a loss leader at shopping malls. Transportation Research Part B: Methodological, 91 . pp. 98-112. ISSN 0191-2615

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This paper investigates the pricing of malls in an environment where shoppers choose between a car and public transportation in getting to a suburban mall. The mall implicitly engages in mixed bundling; it sells goods bundled with parking to shoppers who come by car, and only goods to shoppers who come by public transportation. There are external costs of discomfort in public transportation due to crowdedness. Thus, shoppers using public transportation deter each other. The mall internalizes these external costs, much like a policy maker. To do so, it raises the sales price of the good and sets a parking fee less than parking’s marginal cost. Hence, parking is always a loss leader. Surprisingly, this pricing scheme is not necessarily distortionary.
Item Type: Article
Uncontrolled Keywords: Bundling; Loss-leader pricing; Mode choice; Public transportation; Shopping mall parking
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Arts and Social Sciences > Academic programs > Economics
Faculty of Arts and Social Sciences
Depositing User: Eren İnci
Date Deposited: 08 Aug 2016 15:10
Last Modified: 22 May 2019 13:39

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