Internalizing Externalities: the Pricing of Space in Shopping Malls

Pashigian, B. Peter; Gould, Eric D.

doi:10.1086/467386

Cited by 159 publications

(88 citation statements)

References 7 publications

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“…These rental figures pale in comparison with the mean rent psf of $16.42 received from all stores (anchors and mall stores) by mall owners. See also Pashigian and Gould (1998). 7 To verify our assessments, we obtained independent assessments by members of the development firm, who overwhelmingly agreed with ours.…”

Section: The Efficient Allocation Of Mall Spacementioning

confidence: 62%

“…Tables 1 and 2 present the basic summary statistics of the data for anchor stores (department stores) and nonanchor 2 A few empirical papers have examined externalities in retail contracts, but none of them have actual data on sales. Pashigian and Gould (1998) did not examine contractual specifications, and used aggregated rent and sales data by product category to examine the pricing of externalities. Benjamin, Boyle, andSirmans (1990, 1992) examined contracts for stores in a very limited number of small shopping centers, not a large sample of large malls as in our case, and did not have data on actual sales.…”

Section: Datamentioning

confidence: 99%

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Contracts, Externalities, and Incentives in Shopping Malls

Gould

Pashigian

Prendergast

2005

Review of Economics and Statistics

117

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Abstract-This paper demonstrates that mall store contracts are written to internalize externalities through both an efficient allocation and pricing of space, and an efficient allocation of incentives across stores. Certain stores generate externalities by drawing customers to other stores, whereas many stores primarily benefit from external mall traffic. Therefore, to varying degrees, the success of each store depends upon the presence and effort of other stores, and the effort of the developer to attract customers to the mall. Using a unique data set of mall tenant contracts, we show that rental contracts are written to (i) efficiently price the net externality of each store and (ii) align the incentives to induce optimal effort by the developer and each mall store according to the externality of each store's effort.

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Section: The Efficient Allocation Of Mall Spacementioning

confidence: 62%

Section: Datamentioning

confidence: 99%

Contracts, Externalities, and Incentives in Shopping Malls

Gould

Pashigian

Prendergast

2005

Review of Economics and Statistics

117

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“…18 Let us denote as before x = ms(t) − p and y = nπ(t) − q the total expected gross surplus and profit 17 Their results as all results in this literature require some restrictions on the way consumers and producers select their platform. While there are many alternatives discussed in the literature, they would all lead to same conclusion for the competitive benchmark.…”

Section: Proposition 4 (Caillaud and Jullienmentioning

confidence: 94%

“…Then by setting the maximal transaction fee the platform can appropriate the full surplus P t = S. They then set a competitive benchmark by showing that in this set-up the equilibrium involves zero profits. 17 (2003)) Assume that transaction fees are not distortionary and that full taxation is feasible, then any equilibrium involves a single active intermediary with zero profits.…”

Section: Competition With Exclusivitymentioning

confidence: 99%

Two-sided Markets and Electronic Intermediaries

Jullien¹

2005

CESifo Economic Studies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may TWO-SIDED MARKETS AND ELECTRONIC INTERMEDIARIES AbstractThe object of this paper is to discuss on-line intermediation from the perspective of two-sided markets. It builds a simple model of the intermediation activity when trading partners are involved in a commercial relationship and uses it to illustrate some of the results that emerge in the two-sided market literature, as well as to discuss some new aspects. The first part concentrates on a monopoly intermediation service and discusses both efficient pricing and monopoly pricing. The second part discusses the nature of competition between intermediaries, addressing issues as competitive crosssubsidies, multi-homing or tying.JEL Code: D4, D85, L12, L13, L14, L40.

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“…Research indicates that large tenants get favorable lease terms due to the positive externalities they provide. For example, Pashigian and Gould (1998) find that large anchor properties receive rent subsidies and smaller, lesser known stores pay rent premiums due to these externalities. Gould, Pashigian and Prendergast (2005) note that, on average, anchor stores occupy over 58% of the total leasable space in a mall, but that they only pay 10% of the total rent collected by the developer.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Tenant Diversification on Spreads and Default Rates for Mortgages on Retail Properties

Shafer¹,

Yıldırım²,

Ambrose³

2015

22nd Annual European Real Estate Society Conference

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We use an empirical model of commercial mortgage spreads to examine how tenant diversification impacts credit spreads for mortgages on retail properties. We find that mortgages on properties with a highly diversified tenant base have spreads that are up to 8.5 basis points higher than spreads on mortgages for single-tenant properties, but that mortgages on properties with moderate levels of tenant diversification have spreads that are up to 5.5 basis points lower than mortgages on single-tenant properties. The spread discount for mortgages on properties with moderate levels of tenant diversification disappears when the lease of the property's largest tenant expires before the loan matures. Despite the spread discount that is given to properties with moderate levels of tenant diversification, we find that the likelihood with which a mortgage goes into default increases as tenant diversification increases.

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Internalizing Externalities: the Pricing of Space in Shopping Malls

Cited by 159 publications

References 7 publications

Contracts, Externalities, and Incentives in Shopping Malls

Contracts, Externalities, and Incentives in Shopping Malls

Two-sided Markets and Electronic Intermediaries

The Impact of Tenant Diversification on Spreads and Default Rates for Mortgages on Retail Properties

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