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Is Wal-Mart Good for Competition? Evidence from Milk Prices

Author

Listed:
  • Rebecca L. O. Cleary

    (University of Connecticut)

  • Rigoberto A. Lopez

    (University of Connecticut)

Abstract

This article examines the impact of Wal-Mart Supercenters’ entry on incumbents’ pricing behavior and demand. Using a structural model and milk data from the Dallas/Fort Worth supermarket chains, empirical results show that an expansion of Supercenters caused incumbents to price milk significantly more competitively, dropping on average 22.5% between 1996 and 2002, in spite of declines in their milk demand. Furthermore, consumer gains exceeded incumbent losses, lending further support to the notion that Wal-Mart is good for competition and consumers.

Suggested Citation

  • Rebecca L. O. Cleary & Rigoberto A. Lopez, 2007. "Is Wal-Mart Good for Competition? Evidence from Milk Prices," Food Marketing Policy Center Research Reports 101, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    • Handle: RePEc:zwi:fpcrep:101
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    File URL: http://fmpc.uconn.edu/publications/rr/rr101.pdf
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    Cited by:

    1. Bonanno, Alessandro & Lopez, Rigoberto A., 2009. "Is Wal-Mart a Monopsony? Evidence from Local Labor Markets," 2009 Conference, August 16-22, 2009, Beijing, China 51289, International Association of Agricultural Economists.

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    Keywords

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    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other

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