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Is Wal-Mart Good for Competition? Evidence from Milk Prices

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  • Cleary, Rebecca
  • Lopez, Rigoberto

Abstract

This article examines the impact of Wal-Mart Supercenters’ entry on incumbents’ pricing behavior and demand. Using a structural model and milk data from the Dallas/Fort Worth supermarket chains, empirical results show that an expansion of Supercenters caused incumbents to price milk significantly more competitively, dropping on average 22.5% between 1996 and 2002, in spite of declines in their milk demand. Furthermore, consumer gains exceeded incumbent losses, lending further support to the notion that Wal-Mart is good for competition and consumers.

Suggested Citation

  • Cleary, Rebecca & Lopez, Rigoberto, 2007. "Is Wal-Mart Good for Competition? Evidence from Milk Prices," Research Reports 149207, University of Connecticut, Food Marketing Policy Center.
    • Handle: RePEc:ags:uconnr:149207
    DOI: 10.22004/ag.econ.149207
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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.
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    4. Benaissa Chidmi & Rigoberto A. Lopez & Ronald W. Cotterill, 2005. "Retail oligopoly power, dairy compact, and Boston milk prices," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 477-491.
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    11. Rigoberto Lopez & Azzeddine Azzam & Carmen Lirón-España, 2002. "Market Power and/or Efficiency: A Structural Approach," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(2), pages 115-126, March.
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    Cited by:

    1. Bonanno, Alessandro & Lopez, Rigoberto A., 2009. "Is Wal-Mart a Monopsony? Evidence from Local Labor Markets," 2009 Conference, August 16-22, 2009, Beijing, China 51289, International Association of Agricultural Economists.

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    Keywords

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    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other

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