An extension of the gravity model

Abstract

We introduce a practically useful extension of the gravity model. When specifying the distance decay function, the basic gravity model and its variants use actual distance or travel time. But, in reality, travel time to a retail outlet is only a fraction of the time spent on shopping trips. Hence, ignoring “time spent in facilities” may bias market share estimates in a competitive environment. To address this issue and by-passing the need to know time spent on facilities, we propose a simple extension of the gravity model by introducing an extra distance/travel time parameter. For its implementation, zip code (or neighborhood) information of intercepted patrons at facilities is sufficient to determine the extra distance making it practically appealing. To illustrate the estimation and also empirically validate the proposed approach, we analyze a shopping malls application.

Keywords:

• Facility location
• competitive facilities
• estimating market share captured

Disclosure statement

No potential conflict of interest was reported by the authors.