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Testing for Market Preemption Using Sequential Location Data


  • Douglas S. West


This study uses time series data on supermarket location to test locational implications of a theory of market preemption. The primary implication tested is that an established firm has an incentive to construct new plants in a market such that they are only bounded by other plants that it owns. It is found that the data are consistent with a state dependent stochastic process in which neighbor relations matter and also that the underlying probabilities of the process are consistent with the existence of preemptive firm behavior.

Suggested Citation

  • Douglas S. West, 1981. "Testing for Market Preemption Using Sequential Location Data," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 129-143, Spring.
  • Handle: RePEc:rje:bellje:v:12:y:1981:i:spring:p:129-143

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    References listed on IDEAS

    1. Samet, Dov & Tauman, Yair, 1982. "The Determination of Marginal Cost Prices under a Set of Axioms," Econometrica, Econometric Society, vol. 50(4), pages 895-909, July.
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    1. repec:clg:wpaper:2013-26 is not listed on IDEAS
    2. Weifeng Zhai & Shiling Sun & Guangxing Zhang, 2016. "Reshoring of American manufacturing companies from China," Operations Management Research, Springer, vol. 9(3), pages 62-74, December.
    3. Mason, Charles F. & Phillips, Owen R., 2000. "An experimental evaluation of strategic preemption," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 107-135, January.
    4. Mason, Charles F. & Nowell, Cliff, 1998. "An experimental analysis of subgame perfect play: the entry deterrence game," Journal of Economic Behavior & Organization, Elsevier, vol. 37(4), pages 443-462, December.
    5. Pinkse, Joris & Slade, Margaret E., 1998. "Contracting in space: An application of spatial statistics to discrete-choice models," Journal of Econometrics, Elsevier, vol. 85(1), pages 125-154, July.
    6. Nishida, Mitsukuni, 2016. "First-Mover Advantage through Distribution: A Decomposition Approach," HIT-REFINED Working Paper Series 42, Institute of Economic Research, Hitotsubashi University.
    7. Victor Aguirregabiria & Gustavo Vicentini, 2006. "Dynamic Spatial Competition Between Multi-Store Firms," Working Papers tecipa-253, University of Toronto, Department of Economics.
    8. Sault, Joanne & Toivanen, Otto & Waterson, Michael, 2003. "Learning and Location," The Warwick Economics Research Paper Series (TWERPS) 693, University of Warwick, Department of Economics.
    9. Harry Bloch & Curtis Eaton & Robert Rothschild, 2013. "Does market size matter?," Working Papers 35024217, Lancaster University Management School, Economics Department.
    10. Kosová, Renáta & Lafontaine, Francine, 2012. "Much ado about chains: A research agenda," International Journal of Industrial Organization, Elsevier, vol. 30(3), pages 303-308.

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