Entry of Wal-Mart Supercenters and Supermarkets’ Profit Margins

This article quantifies the impact of Wal-Mart Supercenters on supermarkets’ profitability via a two-stage dynamic entry game, using method of simulated moments 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 50% decrease in milk profit margins for incumbent supermarkets. Effects of scale are found to be more significant for Wal-Mart Supercenters than for incumbent supermarkets, granting Wal-Mart a competitive edge.


Issue Date:
2011-06
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/148291
Total Pages:
29
JEL Codes:
L1; L66; L81; D4; C73
Series Statement:
Working Papers
003




 Record created 2017-04-01, last modified 2017-11-13

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