Second, we address multiple equilibria by estimating equilibrium selection from the observed data.
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. This paper also introduces three main methodological innovations to the marketing literature. 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. 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 negative competition effects to dominate within store categories-especially among discount and midscale stores-but positive agglomeration effects to exist across store categories. By understanding the endogenous behavior of individual store entry, we provide guidance on location choice for mall developers.
We estimate a structural model that takes into account the entry decisions of retail stores and their corollary effects on total shopping mall sales.
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