Location and Agglomeration: The Distribution of Retail and Food Businesses in Dense Urban Environments

Why does one neighborhood have more commerce than another? Why do retailers locate on one particular street, or even a specific street corner, rather than another? How can policy incentivize the ecnomic circumstances that foster local retail development over time?

There exist both endogeneous and exogeneous factors.

This paper analyzes data about 14,000 buildings in Cambridge and Somerville to identify the location factors that explain the observed retail and food-service establishments’ patterns.

Hypothesis 1: We hypothesize that locations with better access to surrounding destinations will have higher probabilities for retail locations in urban settings.

See also Huff model.

This phenomenon is often measured in network stud- ies with a “betweenness” metric that characterizes how many times each link is crossed if trips are made along the shortest paths from a set of origins to a set of destinations (Figure 4). Some store locations lie on paths that are frequently used, and others on paths that are passed by few. This betweenness characteristic of a location has been largely ignored in most retail location models to date.

See also Betweenness.

Hypothesis 2: We hypothesize that retailers are more likely to be found at locations with higher footfall and passing traffic—places that are located more in between surrounding destinations.


Hypothesis 3: We hypothesize that retailers are attracted to locations that are near complementary stores that sell related, but noncompeting, goods.


Hypothesis 4: We hypothesize that retailers selling “search goods,” such as clothes, apparel, and restaurant services, tend to cluster more with like stores than those selling convenience goods, such as groceries or liquor.


Hypothesis 5: Location choices of retail establishments differ significantly from each other depending on the type of goods sold.


2009 ESRI Business Analyst include a total of 1,941 individual establishments in Cambridge and Somerville: 1,258 retail establishments (NAICS 44-45) and 683 eating or drinking establishments (NAICS 722). Geographic coordinates, as well as an address field associated with each establishment in the database allowed us to match each business to a particular building in the two cities.