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Sabina Buczkowska edited If_you_wait_to_do__.tex
over 7 years ago
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Most of the analyses on establishments location choices presented in the first two chapters treats only one selected activity sector at a time, typically industrial or retail activities. Very few empirical studies, i.e., Dube et al. (2016) or
Chatman Buczkowska et al.
(2016) (2014) develop models for a number of various
sectors, yet still, these models are analyzed independently without considering strategic interactions between the sectors.
Literature revised in Chapter III
and especially works of Zhu and Singh (2009), Seim (2006), Jia (2008), Berry (1992), Bresnahan and Reiss (1991a), Ellickson and Misra (2012), Singh (2009), Draganska et al. (2008) ((, Chatman et al. (2016))) helps understand why it is worth considering within- and inter-industry interactions. An excellent review of Draganska et al. (2008) gives a classification of possible modeling choices along plural dimensions, in the informational, temporal contexts, considering the timing of moves, and the discrete, continuous, or mixed decisions of establishments.
Our context is a static discrete game of incomplete information. An establishment's payoff from choosing a particular location depends on its expectation of the optimal location choices of its competitors and exogenous market characteristics (Zhu and Singh, 2009). Based on the expected distribution of other agents across market locations, each establishment selects the location that maximizes its payoff given its own type (Seim, 2006).
%Establishments base their decisions on what they expect other players will do, where they will locate (Draganska et al., 2008).
%The influence of push and pull factors might be different depending on the establishment type considered. One can distinguish revenue-demend oriented establishments, such as the retail, service, and profesional activities sectors, and cost focused establishments, for example warehouses or goods-producing units.
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