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Retail Globalization and Household Welfare: Evidence from Mexico

Author

Listed:
  • David Atkin
  • Benjamin Faber
  • Marco Gonzalez-Navarro

Abstract

The arrival of global retail chains in developing countries is causing a radical transformation in the way households source their consumption. This paper draws on a rich collection of Mexican microdata to estimate the effect of foreign supermarket entry on household welfare and decomposes this effect into six channels. We find that foreign entry causes large welfare gains for the average household predominantly driven by a reduction in the cost of living--both through price reductions at domestic stores and through the direct consumer gains from foreign stores. These gains are, on average, positive for all income groups but are regressive.

Suggested Citation

  • David Atkin & Benjamin Faber & Marco Gonzalez-Navarro, 2018. "Retail Globalization and Household Welfare: Evidence from Mexico," Journal of Political Economy, University of Chicago Press, vol. 126(1), pages 1-73.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/695476
    DOI: 10.1086/695476
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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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