The entry of a hard discount supermarket: price effects

Andrés Gómez-Lobo, Juan Jiménez González and Jordi Perdiguero
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Andrés Gómez-Lobo: Universidad de Chile

INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, 2015, issue 31, 143-154

Abstract: In this paper we study how an incumbent supermarket reacts when entry by a new operator is announced but does not know the product variety that the entrant will offer. We use a database obtained from a special survey for supermarkets in Gran Canaria to estimate how incumbents reacted to entry in the products sold and not sold by the new entrant (LIDL). We show that there is evidence that prices for all goods prior to entry were initially lower in supermarkets close to the future entrant compared to supermarkets further away. However, after entry incumbents’ prices for products not sold by the entrant actually rose near the entrant’s new stores, compared to a suitable control group of supermarkets farther away.

Keywords: Entry; Product Variety; Prices; Retailing (search for similar items in EconPapers)
JEL-codes: L15 L20 L81 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:invreg:0286

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