Parking as a loss leader at shopping malls
Date
2016Source Title
Transportation Research Part B: Methodological
Print ISSN
0191-2615
Electronic ISSN
1879-2367
Publisher
Pergamon Press
Volume
91
Pages
98 - 112
Language
English
Type
ArticleItem Usage Stats
213
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338
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Abstract
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. © 2016 Elsevier Ltd.
Keywords
BundlingLoss-leader pricing
Mode choice
Public transportation
Shopping mall parking
Shopping centers
External costs
Marginal costs
Mixed bundling
Mode choice
Policy makers
Pricing scheme
Public transportation
Costs
Car use
Parking
Pricing policy
Public transport