Concentration and Foreign Sourcing in the U.S. Retail Sector

Dominic Smith

No 1258, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: The U.S. retail sector has changed over the past three decades from one with many small firms to one dominated by large firms. Simultaneously, foreign sourcing of consumer goods has increased substantially, with much of that increase driven by large retailers' imports from China. This study examines the role of direct imports from China in the transformation of the U.S. retail sector. I propose two changes to measuring concentration. Existing work on concentration tends to study its evolution using national, industry-level data, but these metrics provide an incomplete picture given the local nature of competition in retail and the growing importance of multi-product general merchandisers who compete across industries. I therefore construct new data on store-level revenue for all U.S. retailers by 20 major categories of goods. While the national product-level Herfindahl-Hirschman Index more than doubled between 1997 and 2007, local concentration increased by only 50 percent. The new local-by-product concentration measures also enable me to perform an analysis of the role of globalization in increased concentration. I construct a measure of each small store's exposure to direct imports of large retailers. Using a store-level Bartik instrument (1991), the results suggest that a one percentage point increase in exposure to direct imports leads to a 0.7-1.7 percentage point increase in the probability a small store exits. I use a dynamic, continuous-time entry model to estimate the net effect of imports on the structure of competition in clothing sales, a product category highly exposed to direct imports. The results indicate that direct imports account for at least 14 percent of the decrease in the number of small clothing stores.

Date: 2019
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:1258

Access Statistics for this paper

More papers in 2019 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().