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Incumbent's Price Response to New Entry: The Case of Japanese Supermarkets

In: Sticky Prices and Inflation Dynamics (NBER-TCER-CEPR)

Author

Listed:
  • Naohito Abe
  • Daiji Kawaguchi

Abstract

Large-scale supermarkets have rapidly expanded in Japan over the past two decades, partly because of zoning deregulations for large-scale merchants. This study examines the effect of supermarket openings on the price of national-brand products sold at local incumbents, using scanner price data with a panel structure. Detailed geographic information on store location enables us to define treatment and control groups to control for unobserved heterogeneity and temporary demand shock. The analysis reveals that stores in the treatment group lowered their prices of curry paste, bottled tea, instant noodles, and toothpaste by 0.4-3.1% more than stores in a control group in response to a large-scale supermarket opening.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Naohito Abe & Daiji Kawaguchi, 2010. "Incumbent's Price Response to New Entry: The Case of Japanese Supermarkets," NBER Chapters, in: Sticky Prices and Inflation Dynamics (NBER-TCER-CEPR), pages 196-212, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:12181
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    Cited by:

    1. Mayumi Ojima & Junnosuke Shino & Kozo Ueda, 2018. "Retailer Market Concentration, Buyer-Size Discounts and Inflation Dynamics," The Japanese Economic Review, Springer, vol. 69(1), pages 101-127, March.
    2. Andrés Gómez-Lobo & Juan Luis Jiménez & Jordi Perdiguero, 2015. "The entry of a hard discount supermarket: price effects," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 31, pages 143-154.
    3. Toshiyuki MATSUURA & Saki SUGANO, 2009. "The Effect of Relaxation of Entry Restrictions for Large-Scale Retailers on SME Performance: Evidence from Japanese Retail Census," Discussion papers 09054, Research Institute of Economy, Trade and Industry (RIETI).
    4. Javier Campos & Juan Luis Jiménez & Ancor Suárez-Alemán, 2012. "“Not always sunny in paradise: prices and brand diversity in touristic areas supermarkets”," IREA Working Papers 201211, University of Barcelona, Research Institute of Applied Economics, revised May 2012.
    5. Campos, Javier & Jiménez, Juan-Luis & Suárez-Alemán, Ancor, 2013. "Prices and brand diversity in touristic areas supermarkets," Tourism Management, Elsevier, vol. 36(C), pages 435-440.
    6. repec:upd:utppwp:073 is not listed on IDEAS
    7. Katsumi SHIMOTSU, 2014. "The Effect of Large-Scale Retailers on Price Level: Evidence from Japanese data for 1977-1992," Discussion papers 14013, Research Institute of Economy, Trade and Industry (RIETI).
    8. Comisión Nacional de los Mercados y la Competencia (CNMC), 2023. "Guide. Competition against inflation: How competition and efficient regulation help protect the purchasing power of consumers," Colección Estudios de Mercado G-2022-02_ENG, Comisión Nacional de los Mercados y la Competencia (CNMC).
    9. Kozo Ueda & Kota Watanabe & Tsutomu Watanabe, 2018. "Product Turnover and the Cost of Living Index: Quality vs. Fashion Effects," Globalization Institute Working Papers 337, Federal Reserve Bank of Dallas.
    10. Matias Busso & Sebastian Galiani, 2019. "The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 11(1), pages 33-56, January.
    11. Zhang, Chuanchuan, 2011. "大型外资零售商的进入对中国地区劳动力市场的影响 [Impact of Entry of Large Foreign Retailers on Local Labor Markets in China]," MPRA Paper 43912, University Library of Munich, Germany, revised Apr 2012.
    12. Kozo Ueda & Kota Watanabe & Tsutomu Watanabe, 2016. "Product Turnover and Deflation: Evidence from Japan," CAMA Working Papers 2016-71, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L8 - Industrial Organization - - Industry Studies: Services

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