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Wal-Mart and Small Business: Boon or Bane?

Author

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  • Hicks, Michael J.

    (Ball State U)

Abstract

This paper tests the impact of Wal-Mart discount and superstore presence on the number of small businesses in Iowa counties from 1989-2003. I employ and compare two well-known identification strategies in a spatial autoregressive model. I find no statistically meaningful impact of Wal-Mart on small firms (1-20 employees in three employment ranges), though there is weak statistical evidence that an own-county Wal-Mart increases the number of small businesses while Wal-Marts in adjacent counties reduce the number of small businesses. These results mimic several other studies of Wal-Mart including Hicks and Wilburn (2001), Hicks (2007), and Sobel and Dean (2008).

Suggested Citation

  • Hicks, Michael J., 2009. "Wal-Mart and Small Business: Boon or Bane?," The Review of Regional Studies, Southern Regional Science Association, vol. 39(1), pages 73-83.
  • Handle: RePEc:rre:publsh:v:39:y:2009:i:1:p:73-83
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    File URL: http://journal.srsa.org/ojs/index.php/RRS/article/view/185/140
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    References listed on IDEAS

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    1. 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.
    2. Artz, Georgeanne M., 1999. "The Impact of Wal-Mart on Retail Market Structure in Maine," Staff General Research Papers Archive 4003, Iowa State University, Department of Economics.
    3. Emek Basker, 2005. "Job Creation or Destruction? Labor Market Effects of Wal-Mart Expansion," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 174-183, February.
    4. A. Bhargava & L. Franzini & W. Narendranathan, 2006. "Serial Correlation and the Fixed Effects Model," World Scientific Book Chapters,in: Econometrics, Statistics And Computational Approaches In Food And Health Sciences, chapter 4, pages 61-77 World Scientific Publishing Co. Pte. Ltd..
    5. Andrew W. Franklin, 2001. "The impact of Wal-Mart supercenters on supermarket concentration in U.S. metropolitan areas," Agribusiness, John Wiley & Sons, Ltd., vol. 17(1), pages 105-114.
    6. Jinyong Hahn & Jerry Hausman, 2002. "A New Specification Test for the Validity of Instrumental Variables," Econometrica, Econometric Society, vol. 70(1), pages 163-189, January.
    7. Barnes, Nora Ganim & Connell, Allison & Hermenegildo, Lisa & Mattson, Lucinda, 1996. "Regional differences in the economic impact of Wal-Mart," Business Horizons, Elsevier, vol. 39(4), pages 21-25.
    8. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    9. Hicks, Michael J. & Wilburn, Kristy L., 2001. "The Regional Impact of Wal-Mart Entrance: A Panel Study of the Retail Trade Sector in West Virginia," The Review of Regional Studies, Southern Regional Science Association, vol. 31(3), pages 305-313, Winter.
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    Cited by:

    1. Vandegrift, Donald & Loyer, John & Kababik, David, 2011. "The effect of Walmart on the tax base: evidence from New Jersey," MPRA Paper 30937, University Library of Munich, Germany.
    2. Rebecca Cleary & Rigoberto Lopez, 2014. "Supermarket responses to Wal-Mart Supercenter expansion: a structural approach," Empirical Economics, Springer, vol. 47(3), pages 905-925, November.
    3. Donald Vandegrift & John Loyer, 2015. "The Effect Of Walmart And Target On The Tax Base: Evidence From New Jersey," Journal of Regional Science, Wiley Blackwell, vol. 55(2), pages 159-187, March.
    4. Donald Vandegrift, 2016. "The effect of Walmart and Target on property tax rates," Letters in Spatial and Resource Sciences, Springer, vol. 9(3), pages 309-327, October.

    More about this item

    Keywords

    Firm; Firms; Small Firm; Spatial;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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