Estimating network economies in retail chains: a revealed preference approach

• 成果类型: Article
• 署名作者: Ellickson, Paul B.; Houghton, Stephanie; Timmins, Christopher
• 署名单位: University of Rochester; Texas A&M University System; Texas A&M University College Station; Duke University; National Bureau of Economic Research
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12016
• 发表日期: 2013
• 页码: 169-193
• 关键词: wal-mart; asymptotic properties; discrete response; market-structure; COMPETITION; models; entry; CHOICE; identification; inference

摘要

We measure the effects of chain economies, business stealing, and heterogeneous firms' comparative advantages in the discount retail industry. Traditional entry models are ill suited for this high-dimensional problem of strategic interaction. Building upon recently developed profit inequality techniques, our model admits any number of potential rivals and stores per location, an endogenous distribution network, and unobserved (to the econometrician) location attributes that may cause firms to cluster their stores. In an application, we find that Wal-Mart benefits most from local chain economies, whereas Target shows a greater ability to respond to rival competition. Kmart exhibits neither of these strengths. We explore these results with counterfactual simulations highlighting these offsetting effects and find that local chain economies play an important role in securing Wal-Mart's industry leader status.