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Firm Organization and Retail Industry Dynamics

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  • Emin M. Dinlersoz

    (University of Rochester)

Abstract

This paper investigates the spatial organization and dynamics of retail markets using establishment level data on entry, exit, and location choice in the retail alcoholic beverage industry. Establishments are classified into two groups based on firm affiliation: chain vs. stand-alone stores. Stand-alone stores are further broken down into two categories according to product lines offered: diversified vs. specialized stores. The organization and dynamics of the various groups differ markedly. The number of chain stores per capita declines significantly with market size, and these stores exhibit lower entry and exit rates in larger markets. This behavior cannot be readily reconciled with the competitive industry theory. In contrast, both the number per capita and the turnover rates of stand-alone stores are invariant to market size, a behavior consistent with that of a competitive industry. These findings suggest a dominant firms-competitive fringe organization as one potential characterization of retail markets.

Suggested Citation

  • Emin M. Dinlersoz, 2000. "Firm Organization and Retail Industry Dynamics," Econometric Society World Congress 2000 Contributed Papers 0005, Econometric Society.
  • Handle: RePEc:ecm:wc2000:0005
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    References listed on IDEAS

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    9. Kyle Bagwell & Garey Ramey & Daniel F. Spulber, 1997. "Dynamic Retail Price and Investment Competition," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 207-227, Summer.
    10. Richard Ericson & Ariel Pakes, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 53-82.
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