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The entry of a hard discount supermarket: price effects

Listed author(s):
  • Gómez-Lobo, Andrés

    (Universidad de Chile)

  • Jiménez, Juan Luis

    ()

    (Universidad de Las Palmas de Gran Canaria)

  • Perdiguero , Jordi

    (Universitat Autónoma de Barcelona, GiM & IREA)

In this paper we study how an incumbent supermarket reacts when entry by a new operator is announced but does not know the product variety that the entrant will offer. We use a database obtained from a special survey for supermarkets in Gran Canaria to estimate how incumbents reacted to entry in the products sold and not sold by the new entrant (LIDL). We show that there is evidence that prices for all goods prior to entry were initially lower in supermarkets close to the future entrant compared to supermarkets further away. However, after entry incumbents’ prices for products not sold by the entrant actually rose near the entrant’s new stores, compared to a suitable control group of supermarkets farther away.

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Article provided by Asociación Española de Ciencia Regional in its journal INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH.

Volume (Year): (2015)
Issue (Month): 31 ()
Pages: 143-154

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Handle: RePEc:ris:invreg:0286
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