Does Wal-Mart Sell Inferior Goods?
16 Pages Posted: 28 Apr 2008 Last revised: 24 Nov 2016
I estimate the aggregate income elasticity of Wal-Mart's and Target's revenues using quarterly data for 1997-2006. I find that Wal-Mart's revenues increase during bad times, whereas Target's revenues decrease, consistent with Wal-Mart selling "inferior goods" in the technical sense of the term. An upper bound on the aggregate income elasticity of demand for Wal-Mart's wares is -0.5.
Keywords: Retail, Wal-Mart, Target, Inferior Goods
JEL Classification: L81, D12
Suggested Citation: Suggested Citation