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Empirical Analysis of Retail Competition: Spatial Differentiation at Wal-Mart, Amazon.com, and Their Competitors

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  • Lesley Chiou

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    (Department of Economics, Occidental College)

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    Abstract

    This paper quantifies the degree of competition and spatial differentiation across retail channels by exploiting a unique dataset that describes a consumer's choice of store. I estimate a consumer's choice of retailer in the sales market for DVDs among online, mass merchant, electronics, video specialty, and music stores. Using a discrete choice model, I allow for unobserved heterogeneity in preferences for store types and disutility of travel. A consumer's traveling cost varies by income, and substitution occurs proportionately more among stores of the same type. Conditional on price and distance, the average consumer still prefers Wal-Mart over most other stores.

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    File URL: http://faculty.oxy.edu/lchiou/retail.pdf
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    File Function: Revised version, 2006
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    Bibliographic Info

    Paper provided by Occidental College, Department of Economics in its series Occidental Economics Working Papers with number 3.

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    Length: 48 pages
    Date of creation: May 2005
    Date of revision: Nov 2006
    Handle: RePEc:occ:wpaper:3

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    Keywords: discrete choice; retail; spatial differentiation;

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    Cited by:
    1. Chiou, Lesley, 2008. "The timing of movie releases: Evidence from the home video industry," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1059-1073, September.

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