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DTSTART:20260803T233742
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SUMMARY:Anna Vitali (UCL). “Consumer Search and Firm Location: Theory and Evidence from the Garment Sector in Uganda”
DESCRIPTION:Abstract: This paper studies the role of consumer information frictions in driving firms’ location choices within cities. I develop a quantitative equilibrium model in which imperfectly informed consumers prefer searching in high-density locations to minimize the cost of gathering information. When choosing location, firms trade-off consumers’ preferences for agglomeration, fiercer competition induced by spatial proximity, and lower production costs from supply-side externalities. I estimate the model using bespoke data that I collected from garment firms in Kampala. I combine transaction data (to estimate demand), customer data (to shed light on search) and mystery shoppers data (to measures quality). I find that information frictions lead to substantial agglomeration and limit the ability of high-quality firms to attract customers, allowing lower-quality competitors to survive. Counterfactual scenarios show that the introduction of an e-commerce platform induces a large share of firms to disperse, while also causing customers to shift to high-quality businesses. By contrast, commonly adopted decongestion policies that discourage central clusters without solving information frictions disproportionately harm high-quality firms by increasing consumers’ costs of finding high-quality products.Anna Vitali’s personal website can be found here ( https://www.annavitali.com ).Kindly direct all questions regarding this event to Dean Yang at deanyang@umich.edu.\n
URL:https://devecon.umich.edu/events/anna-vitali-ucl-consumer-search-and-firm-location-theory-and-evidence-from-the-garment-sector-in-uganda/
CATEGORIES:General
LOCATION:Lorch 201
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