Retail Chain Expansion: The Early Years of McDonalds in Great Britain

Otto Toivanen () and Michael Waterson

No 8534, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Understanding the development of chainstores is important given the large GDP share of services and the continuing importance of chains in bringing these services to market. Service chains provide a puzzle because they take a long time to develop even when there are obvious expansion opportunities. We study the spread of McDonalds in Britain. We find cannibalization on the demand side and economies of density both within and between markets on the cost side, and evidence of learning by doing at the firm level. Within-period diseconomies of scale at the firm level help explain the lengthy opening pattern.

Keywords: Cost of entry; diffusion; economies of density; economies of scale; entry; expansion (search for similar items in EconPapers)
JEL-codes: L10 L22 L81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his
Date: 2011-08
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