The Economics of Food Courts

Abstract

Abstract This paper examines food courts, where vendors are competing with each other for a fixed number of consumers. This case may arise when consumers are traveling and patronize a food court, or if the destination is a food court. A contest success function is used to describe consumers’ choices, as well as vendor investment and profitability. Using a contest success function allows for varying degrees of substitution between the vendors. Substitution can be a function of location or product space. The model analyzes revenue sharing and changes in product differentiation when aggregate demand for the food court is fixed. The model is also examined if the food court has a collective reputation that depends upon the average investments of each vendor.