MODELING SHOPPING DESTINATION CHOICE BEHAVIOR INCORPORATING NON-MARKET INTERACTIONS AMONG NEIGHBORHOOD INHABITANTS

Abstract

This study proposes a model of shopping destination choice behavior incorporating non-market interactions among neighborhood inhabitants, where the attractiveness of retail markets in a neighborhood is defined based on the interactions. In empirical analysis, we apply the proposed model to the shopping behavior of people who lived in newtowns in Hiroshima. The main contributions of this study are: (1) we model “local-aggregate” social interactions, while most existing studies only deal with “local-average” social interactions, (2) our empirical results indicate that endogenous non-market interaction effects exist even after controlling exogenous and correlated effects, and (3) an existence of multiple equilibria is not confirmed in this particular empirical setting.