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Testing for Market Preemption Using Sequential Location Data

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Author Info
Douglas S. West

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Abstract

This study uses time series data on supermarket location to test locational implications of a theory of market preemption. The primary implication tested is that an established firm has an incentive to construct new plants in a market such that they are only bounded by other plants that it owns. It is found that the data are consistent with a state dependent stochastic process in which neighbor relations matter and also that the underlying probabilities of the process are consistent with the existence of preemptive firm behavior.

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Publisher Info
Article provided by The RAND Corporation in its journal Bell Journal of Economics.

Volume (Year): 12 (1981)
Issue (Month): 1 (Spring)
Pages: 129-143
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Handle: RePEc:rje:bellje:v:12:y:1981:i:spring:p:129-143

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  1. Sault, Joanne & Toivanen, Otto & Waterson, Michael, 2003. "Learning and Location," The Warwick Economics Research Paper Series (TWERPS) 693, University of Warwick, Department of Economics. [Downloadable!]
  2. Risto Laulajainen & Lars-Erik Gadde, 1986. "Locational avoidance: A case study of three Swedish retail chains," Regional Studies, Taylor and Francis Journals, vol. 20(2), pages 131-140, April. [Downloadable!] (restricted)
  3. Victor Aguirregabiria & Gustavo Vicentini, 2006. "Dynamic Spatial Competition Between Multi-Store Firms," Working Papers tecipa-253, University of Toronto, Department of Economics. [Downloadable!]
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