Is Wal-Mart Good for Competition? Evidence from Milk Prices

This article examines the impact of Wal-Mart Supercenters’ entry on incumbents’ pricing behavior and demand. Using a structural model and milk data from the Dallas/Fort Worth supermarket chains, empirical results show that an expansion of Supercenters caused incumbents to price milk significantly more competitively, dropping on average 22.5% between 1996 and 2002, in spite of declines in their milk demand. Furthermore, consumer gains exceeded incumbent losses, lending further support to the notion that Wal-Mart is good for competition and consumers.


Subject(s):
Issue Date:
2007-10
Publication Type:
Report
Record Identifier:
http://ageconsearch.umn.edu/record/149207
PURL Identifier:
http://purl.umn.edu/149207
Total Pages:
27
JEL Codes:
L10; L19; L66; L59
Series Statement:
Research Report
101




 Record created 2017-04-01, last modified 2018-01-22

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