Sales and Firm Entry: The Case of Wal‐Mart

Philip Glandon and Matthew Jaremski

Southern Economic Journal, 2014, vol. 81, issue 1, 168-192

Abstract: Temporary price reductions or “sales” have become increasingly important in the evolution of the price level. We present a model of repeated price competition to illustrate how entry causes incumbents to alternate between high and low prices. Using a six‐year panel of weekly observations from a grocery chain, we find that individual stores employ more sales as the distance to Wal‐Mart falls. Moreover, the increase in the frequency of sales was concentrated on the most popular products, suggesting the use of a loss‐leader strategy.

Date: 2014
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https://doi.org/10.4284/0038-4038-2012.108

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Working Paper: Sales and Firm Entry: The Case of Wal-Mart (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:81:y:2014:i:1:p:168-192

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