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Supermarket Entry and The Survival of Small Stores

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  • Fernando Borraz
  • Juan Dubra

    ()

  • Daniel Ferrés
  • Leandro Zipitría

Abstract

We analyze the effect of supermarket entry on the exit of small stores in the food retailing sector in Montevideo between 1998 and 2007. We use detailed geographical information to identify the link between supermarket entry and the exit of nearby small stores. Entry of supermarkets using small- to medium-size formats creates a competitive threat for the existing small stores, decreasing their probability of survival. The result is robust to several model specifications and varying definitions of what constitutes a supermarket. The impact of supermarket entry is unequivocal for groceries, bakeries, fresh pasta shops, and butcher shops.

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File URL: http://www.um.edu.uy/docs/working_paper_um_cee_2013_03.pdf
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Bibliographic Info

Paper provided by Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo. in its series Documentos de Trabajo/Working Papers with number 1303.

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Date of creation: 2013
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Handle: RePEc:mnt:wpaper:1303

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Postal: Prudencio de Pena 2440, Montevideo 11600
Web page: http://www.um.edu.uy/cee/
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Keywords: Supermarket entry; competition; small store attrition.;

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References

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  1. Russell S. Sobel & Andrea M Dean, 2008. "Has Wal-Mart Buried Mom And Pop?: The Impact Of Wal-Mart On Self-Employment And Small Establishments In The United States," Economic Inquiry, Western Economic Association International, vol. 46(4), pages 676-695, October.
  2. Gould, Eric D & Pashigian, B. Peter & Prendergast, Canice, 2002. "Contracts, Externalities and Incentives in Shopping Malls," CEPR Discussion Papers 3598, C.E.P.R. Discussion Papers.
  3. Marianne Bertrand & Francis Kramarz, 2001. "Does Entry Regulation Hinder Job Creation? Evidence from the French Retail Industry," NBER Working Papers 8211, National Bureau of Economic Research, Inc.
  4. Neumark, David & Zhang, Junfu & Ciccarella, Stephen, 2007. "The Effects of Wal-Mart on Local Labor Markets," IZA Discussion Papers 2545, Institute for the Study of Labor (IZA).
  5. Panle Jia, 2008. "What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the Discount Retailing Industry," Econometrica, Econometric Society, vol. 76(6), pages 1263-1316, November.
  6. Raffaella Sadun, 2014. "Does Planning Regulation Protect Independent Retailers?," NBER Working Papers 19797, National Bureau of Economic Research, Inc.
  7. Emek Basker, 2002. "Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion," Working Papers 0215, Department of Economics, University of Missouri, revised 14 Jan 2004.
  8. Anonymous, 2006. "Selected Posters, Annual Meetings," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(02), August.
  9. Jonathan Haskel & Raffaella Sadun, 2009. "Entry, Exit and Labor Productivity in U.K. Retailing: Evidence from Micro Data," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 271-302 National Bureau of Economic Research, Inc.
  10. Javier Miranda & Shawn Klimek & Ron Jarmin, 2004. "Firm Entry and Exit in the U.S. Retail Sector, 1977-1997," Working Papers 04-17, Center for Economic Studies, U.S. Census Bureau.
  11. Emek Basker, 2007. "When Good Instruments Go Bad," Working Papers 0706, Department of Economics, University of Missouri.
  12. Ronald S. Jarmin & Shawn D. Klimek & Javier Miranda, 2009. "The Role of Retail Chains: National, Regional and Industry Results," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 237-262 National Bureau of Economic Research, Inc.
  13. Raffaella Sadun, 2008. "Does planning regulation protect independent retailers?," LSE Research Online Documents on Economics 28503, London School of Economics and Political Science, LSE Library.
  14. Fernando Borraz & Nicolás González, 2009. "Impact of the Uruguayan Conditional Cash Transfer Program," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 46(134), pages 243-271.
  15. Eliana Viviano, 2006. "Entry regulations and labor market outcomes: evidence from the Italian retail trade sector," Temi di discussione (Economic working papers) 594, Bank of Italy, Economic Research and International Relations Area.
  16. 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).
  17. Griffith, Rachel & Harmgart, Heike, 2008. "Supermarkets and Planning Regulation," CEPR Discussion Papers 6713, C.E.P.R. Discussion Papers.
  18. Andrew W. Franklin, 2001. "The impact of Wal-Mart supercenters on supermarket concentration in U.S. metropolitan areas," Agribusiness, John Wiley & Sons, Ltd., vol. 17(1), pages 105-114.
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