Supermarket responses to Wal-Mart Supercenter expansion: a structural approach
Rebecca Cleary (rcleary@colostate.edu) and
Rigoberto Lopez
Empirical Economics, 2014, vol. 47, issue 3, 905-925
Abstract:
The impact of Wal-Mart in lowering incumbents’ retail prices has been well documented by previous studies using reduced form models. This article uses a structural model to examine the pricing behavior and promotion responses of incumbent supermarkets to a rapid expansion of Wal-Mart Supercenters (WMS) using the Dallas–Fort Worth milk market as a case study. Empirical results verify that WMS expansion disciplines incumbent supermarkets by decreasing oligopoly power and numbing consumer responsiveness to promotion. In addition, WMS expansion lures away price-sensitive consumers, leaving incumbent supermarkets to face more price-inelastic but lower demands for milk. Copyright Springer-Verlag Berlin Heidelberg 2014
Keywords: Wal-Mart; Competition; Promotions (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:47:y:2014:i:3:p:905-925
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DOI: 10.1007/s00181-013-0767-5
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