Better Together? Retail Chain Performance Dynamics in Store Expansion Before and After Mergers

Mitsukuni Nishida () and Nathan Yang ()
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Mitsukuni Nishida: Johns Hopkins Carey Business School

No 14-08, Working Papers from NET Institute

Abstract: We study firm performance dynamics in retail growth using a dynamic model of expansion that allow these dynamics to operate through an unobserved serially correlated process. The model is estimated with data on convenience-store chain diffusion across Japanese prefectures from 1982 to 2012, whereby an actual merger between two chains takes place in 2001. Given the presence of serial correlation and selection biases in observed revenue, we combine particle filtering methods for dynamic games with control functions in revenue regressions. The estimated structural model provides us insights about how performance dynamics evolve before and after the merger. In particular, we demonstrate that the performance dynamics for the merged entity do not improve following the merger.

Keywords: Dynamic discrete choice; Firm size spillovers; Industry dynamics; Learning-by-doing; Market Concentration; Merger analysis; Particle filter; Revenue regression; Serial correlation (search for similar items in EconPapers)
JEL-codes: G34 L10 L25 L81 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2014-09
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-com, nep-dcm, nep-ore and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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