EconPapers    
Economics at your fingertips  
 

Selling a Cheaper Mousetrap: Wal-Mart's Effect on Retail Prices

Emek Basker

No 401, Working Papers from Department of Economics, University of Missouri

Abstract: I quantify the price effect of a low-cost entrant on retail prices using a case-study approach. I consider the effect of Wal-Mart entry on average city-level prices of various consumer goods by exploiting variation in the timing of store entry. The analysis combines two unique data sets, one containing opening dates of all US Wal-Mart stores and the other containing average quarterly retail prices of severalnarrowly-defined commonly-purchased goods over the period 1982-2002. I focus on 10 specific items likely to be sold at Wal-Mart stores and analyze their price dynamics in 165 US cities before and after Wal-Mart entry. An instrumental-variables specification corrects for measurement error in Wal-Mart entry dates. I find robust price effects for several products, including shampoo, toothpaste, and laundry detergent; magnitudes vary by product and specification, but generally range from 1.5-3% in the short run and four times as much in the long-run.

Keywords: Wal-Mart; Competition; Prices; Market Size (search for similar items in EconPapers)
JEL-codes: L13 L81 E31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-ent
Date: 2004-10-20, Revised 2004-03-16
Note: Length: 36 pgs.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Published in Journal of Urban Economics, 58:2 (September 2005), pp. 203-229

Downloads: (external link)
https://economics.missouri.edu/working-papers/2004/wp0401_basker.pdf (application/pdf)

Related works:
Journal Article: Selling a cheaper mousetrap: Wal-Mart's effect on retail prices (2005) Downloads
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:umc:wpaper:0401

Access Statistics for this paper

More papers in Working Papers from Department of Economics, University of Missouri Contact information at EDIRC.
Bibliographic data for series maintained by Valerie Kulp ().

 
Page updated 2019-04-12
Handle: RePEc:umc:wpaper:0401