effects on competition on rent Watch

storminaDcup
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anyone who is studying business/economics can you help me.... what would happen, say with a shopping centre for example, if there was a rival shopping centre nearby..what would happen with the rent prices? the prices would be more competitive right? in order to draw more potential tenants in? but what would happen if one shopping centre was in a superior location.. i guess they could command more in rent because they are closer to local ammenities, have better shops? am i thinking that out right lol
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Juggy123
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obviously more competition means more competitive prices and lower prices in general but if ones got a more dominant location then maybe hes the price setter as hes got better terms of trade?
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Juggy123
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and can give a higher price for rent
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Lampshade
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It depends. If there's only 2 corporations offering retail spaces in shopping centres, then they could collude to keep prices high and maximise industry profits.

Assuming that they don't though, then yes, prices would fall, but the one in the superior location may have higher rental prices still.
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Rob_K
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You could also say that the price elasticity of demand for the stores in the better shopping centre is relatively inelastic, the demand for it won't change as much if the price goes up. The substitute available is less attractive, therefore the better shopping centre can charge more for the rents.
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Juggy123
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(Original post by Rob_K)
You could also say that the price elasticity of demand for the stores in the better shopping centre is relatively inelastic, the demand for it won't change as much if the price goes up. The substitute available is less attractive, therefore the better shopping centre can charge more for the rents.
hey sorry off the point here what AS levels are you doing ?
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Rob_K
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A2 Economics, A2 Chemistry, A2 ICT and AS maths
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