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Empirical Games of Market Entry and Spatial Competition in Retail Industries

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  • Victor Aguirregabiria
  • Junichi Suzuki

Abstract

We survey the recent empirical literature on structural models of market entry and spatial competition in oligopoly retail industries. We start with the description of a framework that encompasses various models that have been estimated in empirical applications. We use this framework to discuss important specification assumptions in this literature: firm heterogeneity; specification of price competition; structure of spatial competition; firms' information; dynamics; multi-store firms; and structure of unobservables. We next describe different types of datasets that have been used in empirical applications. Finally, we discuss econometric issues that researchers should deal with in the estimation of these models, including multiple equilibria and unobserved market heterogeneity. We comment on the advantages and limitations of alternative estimation methods, and how these methods relate to identification restrictions. We conclude with some issues and topics for future research.

Suggested Citation

  • Victor Aguirregabiria & Junichi Suzuki, 2015. "Empirical Games of Market Entry and Spatial Competition in Retail Industries," Working Papers tecipa-534, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-534
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    References listed on IDEAS

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    Cited by:

    1. Martin Labaj & Karol Morvay & Peter Silanic & Christoph Weiss & Biliana Yontcheva, 2016. "Market Structure and Competition in Transition:Results from a Spatial Analysis," Department of Economics Working Papers wuwp218, Vienna University of Economics and Business, Department of Economics.
    2. Pozzi, Andrea & Schivardi, Fabiano, 2015. "Entry Regulation in Retail Markets," CEPR Discussion Papers 10836, C.E.P.R. Discussion Papers.
    3. Eizenberg, Alon & Lach, Saul & Yiftach, Merav, 2016. "Retail Prices in a City," CEPR Discussion Papers 11590, C.E.P.R. Discussion Papers.
    4. Nuno Limão, 2016. "Preferential Trade Agreements," NBER Working Papers 22138, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Retail industries; Market entry and exit; Spatial competition; Econometrics of discrete choice games;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • 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
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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