Consumer Search and Automobile Dealer Co-Location

Retailers co-locate with rivals in order to take advantage of economies of agglomeration when consumers have limited information and engage in costly search, even though co-location implies fiercer price competi- tion. We estiamte a structural model of consumer search for spatially differentiated products using rich data on new car transactions. We use the model to separately disentangle the competition and agglomeration effects of retail...