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Entry in the Swedish Wholesale Trade Sector: Does Market Definition Matter?

Author

Listed:
  • Brandt, Daniel

    (Dalarna University)

  • Macuchova, Zuzana

    (Dalarna University)

  • Rudholm, Niklas

    (The Swedish Research Institute of Trade (HUI))

Abstract

Entry of firms into local markets has often been studied using administrative areas such as municipalities as the assumed relevant markets to study. However, administrative areas and the actual relevant markets based on local demand for firms’ products often need not coincide, which could bias the results of studies treating administrative areas as the relevant markets. Based on a behavioural assumption regarding how retailers act when purchasing products from wholesale trade firms, we create alternative markets using Voronoi diagrams. We then compare the empirical results of investigating the determinants of entry using municipalities as the relevant markets with the results obtained using the Voronoi markets. The results indicate that, in both cases, the same variables are statistically significant in affecting entry, though the estimated effects differ in size.

Suggested Citation

  • Brandt, Daniel & Macuchova, Zuzana & Rudholm, Niklas, 2013. "Entry in the Swedish Wholesale Trade Sector: Does Market Definition Matter?," HUI Working Papers 81, HUI Research.
    • Handle: RePEc:hhs:huiwps:0081
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    Citations

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    Cited by:

    1. Håkansson, Johan & Macuchova, Zuzana & Rudholm, Niklas, 2013. "Predicting Entry of Swedish Wholesale Firms into Local Markets," HUI Working Papers 93, HUI Research.

    More about this item

    Keywords

    Firm entry; market delineation; entrepreneurship; regional economics; count data;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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