THE EFFECT OF ENTRY BY WAL-MART SUPERCENTERS ON RETAIL GROCERY CONCENTRATION

Bobby J. Martens, Frank Dooley () and Sounghun Kim

No 21101, 2006 Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: The U.S. retail grocery industry shifted from an industry dominated by small grocers serving local markets to one characterized by large retailers present in international markets. Average retail grocery concentration as measured by CR4 increased from 17.8 in 1982 to 43.0 in 1999 (U.S. Census Bureau, 1982; Trade Dimensions Marketing Guidebook, 2000). Wal-Mart's tremendous growth is the catalyst to this change. Although Wal-Mart has been studied from multiple perspectives, little is known about Wal-Mart's effect on market concentration. Understanding Wal-Mart's influence on market concentration is important because an extensive literature shows a pattern linking retail grocery market concentration to increases in retail grocery prices. The objective of this analysis is to evaluate the effects of de novo entry by Wal-Mart Supercenters on retail grocery concentration (CR4). Using a panel dataset complied from Trade Dimensions Marketing Guidebook and Market Scope publications, the effect of Wal-Mart Supercenters on changes in retail grocery concentration was estimated. The results show that existing Wal-Mart Supercenter operations and entry by Wal-Mart Supercenters significantly increase the rate of change in retail grocery concentration as measured by CR4.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 23
Date: 2006
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea06:21101

DOI: 10.22004/ag.econ.21101

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