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Does Wal‐Mart Sell Inferior Goods?

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  • EMEK BASKER

Abstract

I estimate the aggregate income elasticity of Wal-Mart's and Target's revenues using quarterly data for 1997-2006. I find that Wal-Mart's revenues increase during bad times, whereas Target's revenues decrease, consistent with Wal-Mart selling "inferior goods" in the technical sense of the term. An upper bound on the aggregate income elasticity of demand for Wal-Mart's wares is -0.5.
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Suggested Citation

  • Emek Basker, 2011. "Does Wal‐Mart Sell Inferior Goods?," Economic Inquiry, Western Economic Association International, vol. 49(4), pages 973-981, October.
  • Handle: RePEc:bla:ecinqu:v:49:y:2011:i:4:p:973-981
    DOI: j.1465-7295.2009.00195.x
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    File URL: http://hdl.handle.net/10.1111/j.1465-7295.2009.00195.x
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    References listed on IDEAS

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    1. Judith A. Chevalier & Anil K. Kashyap & Peter E. Rossi, 2003. "Why Don't Prices Rise During Periods of Peak Demand? Evidence from Scanner Data," American Economic Review, American Economic Association, vol. 93(1), pages 15-37, March.
    2. Emek Basker, 2007. "When Good Instruments Go Bad," Working Papers 0706, Department of Economics, University of Missouri.
    3. Neumark, David & Zhang, Junfu & Ciccarella, Stephen, 2008. "The effects of Wal-Mart on local labor markets," Journal of Urban Economics, Elsevier, vol. 63(2), pages 405-430, March.
    4. Emek Basker & Michael Noel, 2009. "The Evolving Food Chain: Competitive Effects of Wal-Mart's Entry into the Supermarket Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 977-1009, December.
    5. Emek Basker & Shawn Klimek & Pham Hoang Van, 2008. "Supersize It: The Growth of Retail Chains and the Rise of the "Big Box" Retail Format," Working Papers 0809, Department of Economics, University of Missouri, revised 30 Sep 2010.
    6. Emek Basker & Pham Hoang Van, 2007. "Wal-Mart as Catalyst to U.S.-China Trade," Working Papers 0710, Department of Economics, University of Missouri.
    7. Paul W. Dobson & Michael Waterson, 2005. "Chain-Store Pricing Across Local Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(1), pages 93-119, March.
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    Citations

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    Cited by:

    1. Schuetz, Jenny, 2015. "Why are Walmart and Target Next-Door neighbors?," Regional Science and Urban Economics, Elsevier, vol. 54(C), pages 38-48.
    2. Peralta, Denis & Kim, Man-Keun, 2016. "Big-Box Retailers and Personal Income Growth in the U.S," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235216, Agricultural and Applied Economics Association.
    3. repec:bla:ecinqu:v:55:y:2017:i:1:p:339-351 is not listed on IDEAS
    4. Frank Denton & Dean Mountain, 2014. "The implications of mean scaling for the calculation of aggregate consumer elasticities," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 12(3), pages 297-314, September.
    5. John M. Clapp & Stephen L. Ross & Tingyu Zhou, 2015. "Retail Agglomeration and Competition Externalities: Evidence from Openings and Closings of Multiline Department Stores in the US," Working papers 2015-04, University of Connecticut, Department of Economics.
    6. Francisco Galera & Pedro Mendi & Juan Carlos Molero, 2017. "Quality Differences, Third-Degree Price Discrimination, And Welfare," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 339-351, January.
    7. Brea, Humberto & Grifell-Tatje, Emili & Orea, Luis, 2012. "Expectations with Unrealistic Optimism: An Empirical Application," Efficiency Series Papers 2012/01, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).

    More about this item

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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