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The “Wal-Mart effect” in central and eastern Europe

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  • Igan, Deniz
  • Suzuki, Junichi

Abstract

Prior to the recent global financial crisis altering the price dynamics, inflation in central and eastern European countries was characterized by a sharp drop pattern. Several factors contributed to this decline such as benign global economic conditions and growing credibility of domestic macroeconomic policies, yet factors related to industrial organization and market competition have been somewhat overlooked. Using measures of retail competition intensity reflecting the prevalence of high-productivity, modern-format retailers, we find that the decline in retail goods price inflation, and particularly food price inflation, was associated with increased retail competition. This may be linked to improved living conditions as households allocate more to health and education.

Suggested Citation

  • Igan, Deniz & Suzuki, Junichi, 2012. "The “Wal-Mart effect” in central and eastern Europe," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 194-210.
    • Handle: RePEc:eee:jcecon:v:40:y:2012:i:2:p:194-210
    DOI: 10.1016/j.jce.2011.08.003
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    References listed on IDEAS

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    1. Liesbeth Dries & Thomas Reardon & Johan F. M. Swinnen, 2004. "The Rapid Rise of Supermarkets in Central and Eastern Europe: Implications for the Agrifood Sector and Rural Development," Development Policy Review, Overseas Development Institute, vol. 22, pages 525-556, September.
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    5. 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. International Monetary Fund, 2008. "Czech Republic: Selected Issues," IMF Staff Country Reports 2008/040, International Monetary Fund.
    2. Martin Machek, 2012. "Retail Market Structure Development in Central Europe," Central European Business Review, Prague University of Economics and Business, vol. 2012(3), pages 22-27.
    3. Amin, Mohammad, 2015. "Competition and labor productivity in India's retail stores," Journal of Asian Economics, Elsevier, vol. 41(C), pages 57-68.
    4. Bonfrer, André & Chintagunta, Pradeep & Dhar, Sanjay, 2022. "Retail store formats, competition and shopper behavior: A Systematic review," Journal of Retailing, Elsevier, vol. 98(1), pages 71-91.
    5. Ms. Sònia Muñoz & Céline Allard, 2008. "Challenges to Monetary Policy in the Czech Republic—An Integrated Monetary and Fiscal Analysis," IMF Working Papers 2008/072, International Monetary Fund.
    6. Ilya Bolotov, 2013. "Analysis of the Retail Trade and Automotive Industry in the Russian Federation," Central European Business Review, Prague University of Economics and Business, vol. 2013(3), pages 7-14.

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    More about this item

    Keywords

    Wal-Mart effect; Retail competition; Inflation;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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