30 Pages Posted: 3 Mar 2013 Last revised: 16 Jan 2015
Date Written: 2013
We analyze the effect of supermarket entry on the exit of small stores in the food retailing sector in Montevideo between 1998 and 2007. By using detailed geographical information about supermarkets and smaller stores we are able to identify the link between entrants and the exit of nearby small stores. Entry of supermarkets using small to medium-size formats creates a competitive threat for the existing small stores, decreasing their probability of survival. The result is robust to several model specifications and varying definitions of what constitutes a supermarket. The impact of supermarket entry is unequivocal for butchers, bakeries, grocery and fresh pasta shops but significance varies with model specification for kiosks.
Keywords: supermarket entry, competition, small store attrition
JEL Classification: C41, D40, L10, L13, L81
Suggested Citation: Suggested Citation
Borraz, Fernando and Dubra, Juan and Ferres, Daniel and Zipitria, Leandro, Supermarket Entry and the Survival of Small Stores (2013). Review of Industrial Organization, (2014) 44:73–93. Available at SSRN: https://ssrn.com/abstract=2227172 or http://dx.doi.org/10.2139/ssrn.2227172