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

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Author Info
Lesley Chiou () (Department of Economics, Occidental College)
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
File Format: application/pdf
File Function: Revised version, 2006
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Publisher 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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Related research
Keywords: discrete choice retail spatial differentiation

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Find related papers by JEL classification:
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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    Other versions:
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    Other versions:
  3. Smith, Michael D & Brynjolfsson, Erik, 2001. "Consumer Decision-Making at an Internet Shopbot: Brand Still Matters," Journal of Industrial Economics, Blackwell Publishing, vol. 49(4), pages 541-58, December. [Downloadable!] (restricted)
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