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Entry and Prices: Evidence from the Chilean Supermarket Industry

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Author Info

  • Loreto Lira
  • Rosario Rivero
  • Rodrigo Vergara

    ()
    (Instituto de Economía. Pontificia Universidad Católica de Chile.)

Abstract

One of the most significant developments in the last couple of decades in the retail industry has been the emergence of large supermarkets (hypermarkets). The purpose of this paper is to investigate the effect on prices of the entry of a large supermarket into a given location. We use a panel with data from fifteen cities in Chile for the period 1998:I – 2004:IV. The dependent variable is the price of a bundle of 52 food products in each city relative to Santiago. We find that the entry of a hypermarket to a given city reduces prices in that local market by ten percent. Most interestingly, we also find that half of this effect takes place the year before the supermarket actually opens for business.

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File URL: http://www.economia.puc.cl/docs/dt_299.pdf
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Bibliographic Info

Paper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 299.

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Date of creation: 2005
Date of revision:
Handle: RePEc:ioe:doctra:299

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Related research

Keywords: Entry; prices; retail;

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References

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  1. Basker, Emek, 2005. "Selling a cheaper mousetrap: Wal-Mart's effect on retail prices," Journal of Urban Economics, Elsevier, vol. 58(2), pages 203-229, September.
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Cited by:
  1. Viego, Valentina, 2008. "Regulacion de la competencia inter-cpaitalista. El caso de los supermercados
    [Regulation of inter-capitalist competente. The case of supermarkets]
    ," MPRA Paper 9566, University Library of Munich, Germany.
  2. Viego, Valentina, 2008. "Impactos de las grandes superficies comerciales sobre el comercio tradicional y de las medidas regulatorias
    [Big retaling facilities´ impact on traditional retail and regulatory laws]
    ," MPRA Paper 9567, University Library of Munich, Germany.
  3. Francisco Rosende & Matías Tapia, 2006. "La Caída de la Inflación en Chile: Políticas, Instituciones y Suerte," Documentos de Trabajo 308, Instituto de Economia. Pontificia Universidad Católica de Chile..

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