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Product Variety And Competition In The Retail Market For Eyeglasses

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  • RANDAL WATSON

Abstract

I use original data on eyewear retailers in a cross‐section of U.S. markets to study how firms' product range choices vary with the degree of local competition. Market level regressions show average per firm variety declining in the number of rivals. In regressions at the firm level, taking account of spatial differentiation within each market, a non‐monotonic relationship between product ranges and competition is apparent. As the number of nearby rivals increases, per firm variety may first rise before eventually declining. Explanations for this pattern are offered, in terms of a tradeoff between business stealing and clustering effects.

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  • Randal Watson, 2009. "Product Variety And Competition In The Retail Market For Eyeglasses," Journal of Industrial Economics, Wiley Blackwell, vol. 57(2), pages 217-251, June.
    • Handle: RePEc:bla:jindec:v:57:y:2009:i:2:p:217-251
    DOI: 10.1111/j.1467-6451.2009.00381.x
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    3. Sumon Datta & K. Sudhir, 2013. "Does reducing spatial differentiation increase product differentiation? Effects of zoning on retail entry and format variety," Quantitative Marketing and Economics (QME), Springer, vol. 11(1), pages 83-116, March.
    4. Kim In Kyung, 2020. "Movie Variety and the City," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(3), pages 1-26, July.
    5. Policarpo Garcia, Carolina & Furquim de Azevedo, Paulo, 2019. "Should competition authorities care about conglomerate mergers?," International Journal of Industrial Organization, Elsevier, vol. 66(C), pages 78-118.
    6. Ying Fan, 2013. "Ownership Consolidation and Product Characteristics: A Study of the US Daily Newspaper Market," American Economic Review, American Economic Association, vol. 103(5), pages 1598-1628, August.
    7. Maican, Florin & Orth, Matilda, 2021. "Entry Regulations and Product Variety in Retail," CEPR Discussion Papers 15992, C.E.P.R. Discussion Papers.
    8. Elena Argentesi & Paolo Buccirossi & Roberto Cervone & Tomaso Duso & Alessia Marrazzo, 2018. "Price or Variety? An Evaluation of Mergers Effects in Grocery Retailing," CESifo Working Paper Series 7035, CESifo.
    9. Chrysovalantou Milliou & Joel Sandonis, 2018. "Manufacturer Mergers and Product Variety in Vertically Related Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 1-24, March.
    10. Sumon Datta & K. Sudhir, 2013. "Does reducing spatial differentiation increase product differentiation? Effects of zoning on retail entry and format variety," Quantitative Marketing and Economics (QME), Springer, vol. 11(1), pages 83-116, March.
    11. Marcelo Olivares & Gérard P. Cachon, 2009. "Competing Retailers and Inventory: An Empirical Investigation of General Motors' Dealerships in Isolated U.S. Markets," Management Science, INFORMS, vol. 55(9), pages 1586-1604, September.
    12. Liran Einav, 2010. "Not All Rivals Look Alike: Estimating An Equilibrium Model Of The Release Date Timing Game," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 369-390, April.
    13. Minha Hwang & Bart J. Bronnenberg & Raphael Thomadsen, 2010. "An Empirical Analysis of Assortment Similarities Across U.S. Supermarkets," Marketing Science, INFORMS, vol. 29(5), pages 858-879, 09-10.
    14. Argentesi, Elena & Buccirossi, Paolo & Cervone, Roberto & Duso, Tomaso & Marrazzo, Alessia, 2016. "The effect of retail mergers on prices and variety: An ex-post evaluation," DICE Discussion Papers 225, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    15. Chung, Hwan & Ahn, Dae-Yong & Ahn, Seungho, 2022. "Spillover effects of a mega shopping complex on pre-existing, small retail shops over space, over time and across retail types," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    16. Sumon Datta & K. Sudhir, 2012. "Does Reducing Spatial Differentiation Increase Product Differentiation" Effects of Zoning on Retail Entry and Format Variety," Cowles Foundation Discussion Papers 1851, Cowles Foundation for Research in Economics, Yale University, revised Sep 2012.
    17. Argentesi, Elena & Buccirossi, Paolo & Cervone, Roberto & Duso, Tomaso & Marrazzo, Alessia, 2021. "The effect of mergers on variety in grocery retailing," International Journal of Industrial Organization, Elsevier, vol. 79(C).
    18. Charlotte R. Ren & Ye Hu & Yu (Jeffrey) Hu & Jerry Hausman, 2011. "Managing Product Variety and Collocation in a Competitive Environment: An Empirical Investigation of Consumer Electronics Retailing," Management Science, INFORMS, vol. 57(6), pages 1009-1024, June.
    19. Lijesen, M.G., 2010. "Empirical applications of spatial competition; an interpretative literature review," Serie Research Memoranda 0006, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    20. Mitsuru Sunada, 2012. "Competition among movie theaters: an empirical investigation of the Toho–Subaru antitrust case," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 36(3), pages 179-206, August.

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