Sales and Firm Entry: The Case of Wal-Mart
Temporary price reductions or â€œsalesâ€ have become increasingly important in the evolution of the price level. We present a model of repeated price competition to illustrate how entry causes incumbents to alternate between high and low prices. Using a six year panel of weekly observations from a grocery chain, we find that individual stores employ more sales as the distance to Wal-Mart falls. Moreover, the increase in the frequency of sales was concentrated on the most popular products, suggesting the use of a loss-leader strategy.
|Date of creation:||2012|
|Contact details of provider:|| Postal: 13 Oak Drive, Hamilton, NY 13346-1389|
Phone: (315) 228-7533
Fax: (315) 228-7033
Web page: http://www.colgate.edu/academics/departments-and-programs/economics
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeffrey R. Campbell & Benjamin Eden, 2005.
"Rigid prices: evidence from U.S. scanner data,"
Working Paper Series
WP-05-08, Federal Reserve Bank of Chicago.
- Sam Peltzman, 1998.
"Prices Rise Faster Than They Fall,"
University of Chicago - George G. Stigler Center for Study of Economy and State
142, Chicago - Center for Study of Economy and State.
- Neumark, David & Zhang, Junfu & Ciccarella, Stephen, 2007.
"The Effects of Wal-Mart on Local Labor Markets,"
IZA Discussion Papers
2545, Institute for the Study of Labor (IZA).
- David Neumark & Junfu Zhang & Stephen Ciccarella, 2006. "The Effects of Wal-Mart on Local Labor Markets," Working Papers 060711, University of California-Irvine, Department of Economics.
- David Neumark & Junfu Zhang & Stephen Ciccarella, 2005. "The Effects of Wal-Mart on Local Labor Markets," NBER Working Papers 11782, National Bureau of Economic Research, Inc.
- Kehoe, Patrick & Midrigan, Virgiliu, 2015.
"Prices are sticky after all,"
Journal of Monetary Economics,
Elsevier, vol. 75(C), pages 35-53.
- Rajiv Lal, 1990. "Price Promotions: Limiting Competitive Encroachment," Marketing Science, INFORMS, vol. 9(3), pages 247-262.
- John Conlisk & Eitan Gerstner & Joel Sobel, 1984. "Cyclic Pricing by a Durable Goods Monopolist," The Quarterly Journal of Economics, Oxford University Press, vol. 99(3), pages 489-505.
- Guimarães, Bernardo & Sheedy, Kevin D., 2008.
"Sales and Monetary Policy,"
CEPR Discussion Papers
6940, C.E.P.R. Discussion Papers.
- Kevin Sheedy & Bernardo Guimaraes, 2009. "Sales and Monetary Policy," 2009 Meeting Papers 365, Society for Economic Dynamics.
- Bernardo Guimaraes & Kevin D. Sheedy, 2008. "Sales and Monetary Policy," CEP Discussion Papers dp0887, Centre for Economic Performance, LSE.
- Bernardo Guimaraes & Kevin D. Sheedy, 2008. "Sales and monetary policy," LSE Research Online Documents on Economics 25492, London School of Economics and Political Science, LSE Library.
- Lal, Rajiv & Matutes, Carmen, 1994. "Retail Pricing and Advertising Strategies," The Journal of Business, University of Chicago Press, vol. 67(3), pages 345-370, July.
- 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.
- Mark Bils & Peter J. Klenow, 2002.
"Some Evidence on the Importance of Sticky Prices,"
NBER Working Papers
9069, National Bureau of Economic Research, Inc.
- Benjamin Eden & Matthew Jaremski, 2009. "Rigidity, Dispersion and Discreteness in Chain Prices," Vanderbilt University Department of Economics Working Papers 0903, Vanderbilt University Department of Economics.
- Capps, Oral, Jr. & Griffin, James M., 1998. "Effect Of A Mass Merchandiser On Traditional Food Retailers," Journal of Food Distribution Research, Food Distribution Research Society, vol. 29(1), February.
- Vishal P. Singh & Karsten T. Hansen & Robert C. Blattberg, 2006. "Market Entry and Consumer Behavior: An Investigation of a Wal-Mart Supercenter," Marketing Science, INFORMS, vol. 25(5), pages 457-476, September.
- Emi Nakamura & Jón Steinsson, 2008. "Five Facts about Prices: A Reevaluation of Menu Cost Models," The Quarterly Journal of Economics, Oxford University Press, vol. 123(4), pages 1415-1464.
- DeGraba, Patrick, 2006. "The loss leader is a turkey: Targeted discounts from multi-product competitors," International Journal of Industrial Organization, Elsevier, vol. 24(3), pages 613-628, May.
- Dube, Arindrajit & Lester, T. William & Eidlin, Barry, 2007. "Firm Entry and Wages: Impact of Wal-Mart Growth on Earnings Throughout the Retail Sector," Institute for Research on Labor and Employment, Working Paper Series qt22s5k4pv, Institute of Industrial Relations, UC Berkeley.
- Daniel Hosken & David Reiffen, 2004. "How Retailers Determine Which Products Should Go on Sale: Evidence From Store-Level Data," Journal of Consumer Policy, Springer, vol. 27(2), pages 141-177, June.
When requesting a correction, please mention this item's handle: RePEc:cgt:wpaper:2012-03. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chad Sparber)
If references are entirely missing, you can add them using this form.