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The Effect Of Entry By Wal-Mart Supercenters On Retail Grocery Concentration

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  • Martens, Bobby J.
  • Dooley, Frank J.
  • Kim, Sounghun

Abstract

The U.S. retail grocery industry shifted from an industry dominated by small grocers serving local markets to one characterized by large retailers present in international markets. Average retail grocery concentration as measured by CR4 increased from 17.8 in 1982 to 43.0 in 1999 (U.S. Census Bureau, 1982; Trade Dimensions Marketing Guidebook, 2000). Wal-Mart's tremendous growth is the catalyst to this change. Although Wal-Mart has been studied from multiple perspectives, little is known about Wal-Mart's effect on market concentration. Understanding Wal-Mart's influence on market concentration is important because an extensive literature shows a pattern linking retail grocery market concentration to increases in retail grocery prices. The objective of this analysis is to evaluate the effects of de novo entry by Wal-Mart Supercenters on retail grocery concentration (CR4). Using a panel dataset complied from Trade Dimensions Marketing Guidebook and Market Scope publications, the effect of Wal-Mart Supercenters on changes in retail grocery concentration was estimated. The results show that existing Wal-Mart Supercenter operations and entry by Wal-Mart Supercenters significantly increase the rate of change in retail grocery concentration as measured by CR4.

Suggested Citation

  • Martens, Bobby J. & Dooley, Frank J. & Kim, Sounghun, 2006. "The Effect Of Entry By Wal-Mart Supercenters On Retail Grocery Concentration," 2006 Annual meeting, July 23-26, Long Beach, CA 21101, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21101
    DOI: 10.22004/ag.econ.21101
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    References listed on IDEAS

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    Cited by:

    1. Fernando Borraz & Juan Dubra & Daniel Ferrés & Leandro Zipitría, 2014. "Supermarket Entry and the Survival of Small Stores," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(1), pages 73-93, February.
    2. Fernando Borraz & Juan Dubra & Daniel Ferrés & Leandro Zipitría, 2009. "Supermarket Entry and its effect on small stores in Montevideo, 1998 to 2007," Documentos de trabajo 2009005, Banco Central del Uruguay.
    3. Zipitría, Leandro, 2011. "Impacto económico del Supermercadismo [The Economics of Supermarkets: A Brief Literature Review]," MPRA Paper 28419, University Library of Munich, Germany.

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