Intra- and Inter-Channel Competition in Local-Service Sectors
Although economically very important, local-service sectors have received little attention in the extensive literature on competitive interactions. Detailed data gathering in these sectors is hard, not only because of the multitude of local players, but also because key service dimensions are hard to quantify. Using empirical entry models, we show how to infer information on these sectors’ degree of intra- and inter-channel competition from the observed entry decisions in different local markets. The approach also controls for relevant socio-demographic characteristics of the trading area that may affect performance. We apply the proposed empirical entry model to the video-rental market. Additional entries of video stores are found to significantly increase the level of intra-channel competition. Unlike the predictions of many normative economic models, we find this increase to be larger when the entry occurs in a duopoly than in a monopoly, a pattern consistent with recent experimental research on collusive behavior in oligopolies. We also find evidence of inter-channel cannibalization from the upstream channel (movie theatres), but not from the downstream channel (premium cable). Finally, various socio-demographic characteristics of the trading zone, such as income and household size, are found to also have a significant impact on store performance.
|Date of creation:||30 Mar 2005|
|Date of revision:|
|Contact details of provider:|| Postal: RSM Erasmus University & Erasmus School of Economics, PoBox 1738, 3000 DR Rotterdam|
Phone: 31-10-408 1182
Fax: 31-10-408 9020
Web page: http://www.erim.eur.nl/
More information through EDIRC
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.:
- Hubert Gatignon & Jehoshua Eliashberg & Thomas S. Robertson, 1989. "Modeling Multinational Diffusion Patterns: An Efficient Methodology," Marketing Science, INFORMS, vol. 8(3), pages 231-247.
- Steffen Huck & Hans-Theo Normann & Jörg Oechssler, 2001.
"Two are Few and Four are Many: Number Effects in Experimental Oligopolies,"
Bonn Econ Discussion Papers
bgse12_2001, University of Bonn, Germany.
- Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004. "Two are few and four are many: number effects in experimental oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 435-446, April.
- Anita Elberse & Jehoshua Eliashberg, 2003. "Demand and Supply Dynamics for Sequentially Released Products in International Markets: The Case of Motion Pictures," Marketing Science, INFORMS, vol. 22(3), pages 329-354.
- K. Sudhir, 2001. "Competitive Pricing Behavior in the Auto Market: A Structural Analysis," Marketing Science, INFORMS, vol. 20(1), pages 42-60, January.
- Abhik Roy & Dominique M. Hanssens & Jagmohan S. Raju, 1994. "Competitive Pricing by a Price Leader," Management Science, INFORMS, vol. 40(7), pages 809-823, July.
- Jean Abraham & Martin Gaynor & William B. Vogt, 2005.
"Entry and Competition in Local Hospital Markets,"
GSIA Working Papers
1999-E32, Carnegie Mellon University, Tepper School of Business.
- Jean Marie Abraham & Martin Gaynor & William B Vogt, 2003. "Entry and Competition in Local Hospital Markets," The Centre for Market and Public Organisation 03/088, Department of Economics, University of Bristol, UK.
- Jean M. Abraham & Martin S. Gaynor & William B. Vogt, 2005. "Entry and Competition in Local Hospital Markets," NBER Working Papers 11649, National Bureau of Economic Research, Inc.
- Sanjeev Swami & Jehoshua Eliashberg & Charles B. Weinberg, 1999. "SilverScreener: A Modeling Approach to Movie Screens Management," Marketing Science, INFORMS, vol. 18(3), pages 352-372.
- Sanjay K. Dhar & Stephen J. Hoch, 1997. "Why Store Brand Penetration Varies by Retailer," Marketing Science, INFORMS, vol. 16(3), pages 208-227.
- Alan L. Montgomery, 1997. "Creating Micro-Marketing Pricing Strategies Using Supermarket Scanner Data," Marketing Science, INFORMS, vol. 16(4), pages 315-337.
- Bresnahan, T.F & Reiss, P.C., 1989.
"Entry And Competition In Concentrated Markets,"
151, Stanford - Studies in Industry Economics.
- Michael J. Mazzeo, 2002. "Product Choice and Oligopoly Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 221-242, Summer.
- Venkatesh Shankar, 1997. "Pioneers' Marketing Mix Reactions to Entry in Different Competitive Game Structures: Theoretical Analysis and Empirical Illustration," Marketing Science, INFORMS, vol. 16(3), pages 271-293.
- Manuszak, Mark D., 2002. "Endogenous market structure and competition in the 19th century American brewing industry," International Journal of Industrial Organization, Elsevier, vol. 20(5), pages 673-692, May.
- CAMPO, Katia & GIJSBRECHTS, Els & GOOSSENS, T. & VERHETSEL, Ann, . "The impact of location-specific factors on attractiveness and performance of product categories," Working Papers 1999012, University of Antwerp, Faculty of Applied Economics.
- K. Sudhir, 2001. "Competitive Pricing Behavior in the US Auto Market: A Structural Analysis," Yale School of Management Working Papers ysm228, Yale School of Management.
- Bart J. Bronnenberg & Carl F. Mela, 2004. "Market Roll-Out and Retailer Adoption for New Brands," Marketing Science, INFORMS, vol. 23(4), pages 500-518, September.
- Koen Pauwels & Shuba Srinivasan, 2004. "Who Benefits from Store Brand Entry?," Marketing Science, INFORMS, vol. 23(3), pages 364-390, July.
- Julie H. Mortimer, 2008. "Vertical Contracts in the Video Rental Industry -super-1," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 165-199.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, March.
- Asplund, Marcus & Sandin, Rickard, 1999. "The Number of Firms and Production Capacity in Relation to Market Size," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 69-85, March.
- Prasad Ashutosh & Bronnenberg Bart & Mahajan Vijay, 2004. "Product Entry Timing in Dual Distribution Channels: The Case of the Movie Industry," Review of Marketing Science, De Gruyter, vol. 2(1), pages 1-20, March.
- Jan-Benedict E. M. Steenkamp & Vincent R. Nijs & Dominique M. Hanssens & Marnik G. Dekimpe, 2005. "Competitive Reactions to Advertising and Promotion Attacks," Marketing Science, INFORMS, vol. 24(1), pages 35-54, September.
- Vincent R. Nijs & Marnik G. Dekimpe & Jan-Benedict E.M. Steenkamps & Dominique M. Hanssens, 2001. "The Category-Demand Effects of Price Promotions," Marketing Science, INFORMS, vol. 20(1), pages 1-22, September.
- Vrinda Kadiyali & Pradeep Chintagunta & Naufel Vilcassim, 2000. "Manufacturer-Retailer Channel Interactions and Implications for Channel Power: An Empirical Investigation of Pricing in a Local Market," Marketing Science, INFORMS, vol. 19(2), pages 127-148, September.
- K. Sudhir & Pradeep K. Chintagunta & Vrinda Kadiyali, 2005. "Time-Varying Competition," Marketing Science, INFORMS, vol. 24(1), pages 96-109, September.
- Devavrat Purohit, 1997. "Dual Distribution Channels: The Competition Between Rental Agencies and Dealers," Marketing Science, INFORMS, vol. 16(3), pages 228-245.
When requesting a correction, please mention this item's handle: RePEc:ems:eureri:1925. 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: (RePub)
If references are entirely missing, you can add them using this form.