IDEAS home Printed from https://ideas.repec.org/p/osk/wpaper/1516r3.html
   My bibliography  Save this paper

Large-Scaled Chain Stores versus Small-Scaled Local Stores of the Local Production for Local Consumption

Author

Listed:
  • Hiroaki Sandoh

    () (Graduate School of Economics, Osaka University)

  • Risa Suzuki

    () (Yuki, Co., Ltd.)

Abstract

In some localities, a large-scale chain retailer competes against a small-scale local independent retailer that specializes in, for instance, vegetables, fruits, and owers produced locally for local consumption. The former usually attracts consumers by emphasizing its width and depth of products variety, whereas the latter seeks to overcome its limited products assortment by offering lower prices for them than the chain store. This is possible for the local store partly because of lower labor costs and for various other reasons. This study employs the Hotelling unit interval to examine price competition in a duopoly featuring one large-scale chain retailer and one local retailer. To express differences in their product assortments, we assume that the large-scale retailer denoted by A sells two types of product, G 1 and G 2 , whereas the local retailer denoted by B sells only G 1 . Moreover, we assume that all consumers purchase G 1 at A or B after comparing prices and buy G 2 at A . We examine both Nash and Stackelberg equilibrium to indicate that the local retailer can survive competition with the large-scale chain retailer. We also reveal that a monopolistic market structure, not duopoly, optimize the social welfare if consumers always purchase both G 1 and G 2 .

Suggested Citation

  • Hiroaki Sandoh & Risa Suzuki, 2015. "Large-Scaled Chain Stores versus Small-Scaled Local Stores of the Local Production for Local Consumption," Discussion Papers in Economics and Business 15-16-Rev.3, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Sep 2015.
  • Handle: RePEc:osk:wpaper:1516r3
    as

    Download full text from publisher

    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1516R3.pdf
    Download Restriction: no

    More about this item

    Keywords

    Large-scale chain retailer; Small-scale local independent store; Duopoly; Hotelling; Price competition;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osk:wpaper:1516r3. 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: (Atsuko SUZUKI). General contact details of provider: http://edirc.repec.org/data/feosujp.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.