Testing for Market Preemption Using Sequential Location Data

Douglas West

Bell Journal of Economics, 1981, vol. 12, issue 1, 129-143

Abstract: This study uses time series data on supermarket location to test locational implications of a theory of market preemption. The primary implication tested is that an established firm has an incentive to construct new plants in a market such that they are only bounded by other plants that it owns. It is found that the data are consistent with a state dependent stochastic process in which neighbor relations matter and also that the underlying probabilities of the process are consistent with the existence of preemptive firm behavior.

Date: 1981
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