The Impact of Wal-Mart Supercenters on Supermarkets’ Profit Margins

Xiaoou Liu and Rigoberto Lopez

No 61800, 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado from Agricultural and Applied Economics Association

Abstract: The Impact of Wal-Mart Supercenters on Supermarkets’ Profit Margins. XIAOOU LIU (Email: xiaoou2010@gmail.com, School of Agricultural Economics and Rural Development, Renmin University of China, Beijing, China 100872) RIGOBERTO LOPEZ (Professor and Department Head, Department of Agricultural and Resource Economics, Storrs, CT 06269) This paper quantifies the impact of Wal-Mart Supercenters on supermarkets’ profitability via a two-stage dynamic entry game, using simulated methods of moment and milk scanner data from Dallas/Fort Worth supermarkets. The empirical findings show that the entry of Wal-Mart Supercenters accounts for about an average of 50% decreases in profit margins for incumbent supermarkets. The effect of scale of economies is found to be more significant for Wal-Mart Supercenters than for incumbent supermarkets.

Keywords: Industrial; Organization (search for similar items in EconPapers)
Pages: 29
Date: 2010-07
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea10:61800

DOI: 10.22004/ag.econ.61800

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