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Determinants of Entry: A Study of Leading U.S. Supermarket Chain Entry Patterns

  • Cotterill, Ronald W.
  • Haller, Lawrence E.

De novo entry by the top 20 U.S. supermarket chains into local markets is examined using Tobit analysis. We find that entry is related to potential entrants' proximity to the local market, market growth, concentration, the number of large chains that are incumbents in the local market, and the competency of potential entrants as measured by their recent internal expansion rate. With regard to competing theories that relate strategic entry barriers to entry patterns, different components of the analysis provide support for different hypotheses. However, the most general model provides little support for the contestability or Chicago efficiency rent hypotheses.

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Paper provided by University of Connecticut, Food Marketing Policy Center in its series Research Reports with number 25226.

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Date of creation: 1991
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Handle: RePEc:ags:uconnr:25226
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  1. Schmalensee, Richard., 1987. "Inter-industry studies of structure and performance," Working papers 1874-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  2. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
  3. Gilbert, Richard J, 1989. "The Role of Potential Competition in Industrial Organization," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 107-27, Summer.
  4. Duetsch, Larry L, 1984. "Entry and the Extent of Multiplant Operations," Journal of Industrial Economics, Wiley Blackwell, vol. 32(4), pages 477-87, June.
  5. Shapiro, Daniel & Khemani, R. S., 1987. "The determinants of entry and exit reconsidered," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 15-26, March.
  6. Geroski, P. A. & Masson, R. T., 1987. "Dynamic market models in industrial organization," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 1-13, March.
  7. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August.
  8. Therese Flaherty, M., 1980. "Dynamic limit pricing, barriers to entry, and rational firms," Journal of Economic Theory, Elsevier, vol. 23(2), pages 160-182, October.
  9. Masson, Robert T & Shaanan, Joseph, 1982. "Stochastic-Dynamic Limiting Pricing: An Empirical Test," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 413-22, August.
  10. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
  11. Roger Sherman & Thomas D. Willett, 1967. "Potential Entrants Discourage Entry," Journal of Political Economy, University of Chicago Press, vol. 75, pages 400.
  12. Lamm, R McFall, 1981. "Prices and Concentration in the Food Retailing Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 30(1), pages 67-78, September.
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