Skip to main content
padlock icon - secure page this page is secure

Estimating network economies in retail chains: a revealed preference approach

Buy Article:

$59.00 + tax (Refund Policy)

We measure the effects of chain economies, business stealing, and heterogeneous firms’ comparative advantages in the discount retail industry. Traditional entry models are ill suited for this high‐dimensional problem of strategic interaction. Building upon recently developed profit inequality techniques, our model admits any number of potential rivals and stores per location, an endogenous distribution network, and unobserved (to the econometrician) location attributes that may cause firms to cluster their stores. In an application, we find that Wal‐Mart benefits most from local chain economies, whereas Target shows a greater ability to respond to rival competition. Kmart exhibits neither of these strengths. We explore these results with counterfactual simulations highlighting these offsetting effects and find that local chain economies play an important role in securing Wal‐Mart's industry leader status.
No References
No Citations
No Supplementary Data
No Article Media
No Metrics

Document Type: Research Article

Publication date: June 1, 2013

  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
X
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more