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Estimating Network Economies in Retail Chains: A Revealed Preference Approach / Paul B. Ellickson, Stephanie Houghton, Christopher Timmins.
- Format:
- Book
- Author/Creator:
- Ellickson, Paul B.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w15832.
- NBER working paper series no. w15832
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Estimating Network Economies in Retail Chains
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2010.
- Summary:
- 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 Kmart and Target benefit most from local chain economies; Wal-Mart's advantage is more global. We explore these results with counterfactual simulations highlighting these offsetting effects.
- Notes:
- Print version record
- March 2010.
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