The Optimal Location of a Shopping Mall: A Comparison of Different Pricing Policies

This paper adopts a line space model to examine the optimal location of a shopping mall under mill pricing and uniform pricing and to compare the effects of he pricing policies on price, output, profit, and welfare. In this model, the optimal location of a shopping mall is determined by the capitalist, and the price is determined by the dealer. Under linear demand and cost functions, we have reached the following main conclusions: (1) the capitalist selects his optimal location at the market with the smaller demand under the two pricing policies; (2) total output under mill pricing is higher than that under uniform pricing; (3) the dealer will prefer mill pricing, whereas the preference of the capitalist is indeterminate; (4) the welfare level under mill pricing is definitely higher than that under uniform pricing; (5) under uniform pricing, the optimal number affirms declines with an increase in the royalty ratio paid to the capitalist.