Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Working Knowledge
Business Research for Business Leaders
  • Browse All Articles
  • Popular Articles
  • Cold Call Podcasts
  • About Us
  • Leadership
  • Marketing
  • Finance
  • Management
  • Entrepreneurship
  • All Topics...
  • Topics
    • COVID-19
    • Entrepreneurship
    • Finance
    • Gender
    • Globalization
    • Leadership
    • Management
    • Negotiation
    • Social Enterprise
    • Strategy
  • Sections
    • Book
    • Cold Call Podcast
    • HBS Case
    • In Practice
    • Lessons from the Classroom
    • Op-Ed
    • Research & Ideas
    • Research Event
    • Sharpening Your Skills
    • What Do You Think?
    • Working Paper Summaries
  • Browse All
    • COVID-19 Business Impact Center
      COVID-19 Business Impact Center
      Where Should We Build a Mall? The Formation of Market Structure and Its Effect on Sales
      20 Feb 2017Working Paper Summaries

      Where Should We Build a Mall? The Formation of Market Structure and Its Effect on Sales

      by Doug J. Chung, Kyoungwon Seo, and Reo Song
      In spite of the recent surge in e-commerce, brick-and-mortar retail, specifically in the form of large-scale shopping malls, is still the dominant venue for consumer purchases in the developed world. The construction of mass-scale shopping malls has also experienced tremendous growth in newly industrialized countries such as China. This research provides a rigorous, yet practical, framework to understand and evaluate why retail stores join a shopping mall and how their decisions affect mall revenue. The model can be extended and applied to a number of settings where a decision maker must choose among alternative sites to construct a market, for example, for transportation hubs such as airports or train stations.
      LinkedIn
      Email

      Author Abstract

      We estimate a structural model that takes into account the entry decisions of retail stores and their corollary effects on total shopping mall sales. By understanding the endogenous behavior of individual store entry, we provide guidance on location choice for mall developers. We find negative competition effects to dominate within store categories—especially among discount and midscale stores—but positive agglomeration effects to exist across store categories. Although varying by store brand, our results suggest that upscale stores are likely to enter malls in more populated, affluent areas, whereas midscale stores enter less populated, lower-income areas. We find positive causal brand effects for specific upscale and midscale stores, above and beyond market effects, but find negative causal brand effects for all discount stores on mall sales. This paper also introduces three main methodological innovations to the marketing literature. First, we correct for endogeneity with regard to both store entry and mall sales to identify the causal effect of store entry on mall sales. Second, we address multiple equilibria by estimating equilibrium selection from the observed data. Finally, we overcome the computational burden of solving games of complete information with multiple equilibria by utilizing the GPGPU technology, using multiple processing cores in a graphics processing unit to noticeably increase computational speed.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: February 2017
      • HBS Working Paper Number: HBS Working Paper #17-071
      • Faculty Unit(s): Marketing
        Trending
          • 25 Feb 2019
          • Research & Ideas

          How Gender Stereotypes Kill a Woman’s Self-Confidence

          • 17 May 2017
          • Research & Ideas

          Minorities Who 'Whiten' Job Resumes Get More Interviews

          • 24 Feb 2021
          • Lessons from the Classroom

          What History's Biggest Wars Teach Us About Leading in Peace

          • 17 Feb 2021
          • Research & Ideas

          Pandemic Self-Care for CEOs: Rituals, Running, and Cognitive Restructuring

          • 22 Feb 2021
          • Book

          Reaching Today's Omnichannel Customer Takes a New Sales Strategy

      Doug J. Chung
      Doug J. Chung
      MBA Class of 1962 Associate Professor of Business Administration
      Contact
      Send an email
      → More Articles
      Find Related Articles
      • Growth and Development Strategy
      • Geographic Location
      • Sales
      • Retail
      • Real Estate
      • Construction

      Sign up for our weekly newsletter

      Interested in improving your business? Learn about fresh research and ideas from Harvard Business School faculty.
      ǁ
      Campus Map
      Harvard Business School Working Knowledge
      Baker Library | Bloomberg Center
      Soldiers Field
      Boston, MA 02163
      Email: Editor-in-Chief
      →Map & Directions
      →More Contact Information
      • Make a Gift
      • Site Map
      • Jobs
      • Harvard University
      • Trademarks
      • Policies
      • Digital Accessibility
      Copyright © President & Fellows of Harvard College