Abstract

http://ssrn.com/abstract=1886145
 
 

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Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices


Charles Courtemanche


University of North Carolina (UNC) at Greensboro - Department of Economics

Art Carden


affiliation not provided to SSRN

July 2011

NBER Working Paper No. w17220

Abstract:     
Prior research shows grocery stores reduce prices to compete with Walmart Supercenters. This study finds evidence that the competitive effects of two other big box retailers – Costco and Walmart-owned Sam's Club – are quite different. Using city-level panel grocery price data matched with a unique data set on Walmart and warehouse club locations, we find that Costco entry is associated with higher grocery prices at incumbent retailers, and that the effect is strongest in cities with small populations and high grocery store densities. This could be explained by a segmented-market model, or by incumbents competing with Costco along non-price dimensions such as product quality or quality of the shopping experience. We find no evidence that Sam’s Club entry affects grocery stores’ prices, consistent with Sam’s Club’s focus on small businesses instead of consumers.

Number of Pages in PDF File: 50

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Date posted: July 16, 2011  

Suggested Citation

Courtemanche, Charles and Carden, Art, Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices (July 2011). NBER Working Paper No. w17220. Available at SSRN: http://ssrn.com/abstract=1886145

Contact Information

Charles Courtemanche (Contact Author)
University of North Carolina (UNC) at Greensboro - Department of Economics ( email )
Greensboro, NC 27402-6165
United States
Art Carden
affiliation not provided to SSRN
Feedback to SSRN


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