Does Big Drive Out Small? - Entry, Exit, and Differentiation in the Supermarket Industry

Posted: 29 Jul 2010 Last revised: 6 Sep 2011

See all articles by Mitsuru Igami

Mitsuru Igami

Yale University - Department of Economics ; Yale University - Cowles Foundation; University of British Columbia (UBC) - Sauder School of Business

Date Written: July 26, 2010

Abstract

This paper measures the impact of the entry of large supermarkets on incumbents of various sizes. Contrary to the conventional notion that big stores drive small rivals out of the market, data from Tokyo in the 1990s show that large supermarkets’ entry induces the exit of existing large and medium-size competitors, but improves the survival rate of small supermarkets. These findings highlight the role of store size as an important dimension of product differentiation. Size-based entry regulations would appear to protect big incumbents, at the expense of small incumbents and potential entrants.

Keywords: Deregulation, Entry and exit, Product differentiation, Propensity-score matching, Retail

JEL Classification: L11, L13, L51, L81

Suggested Citation

Igami, Mitsuru, Does Big Drive Out Small? - Entry, Exit, and Differentiation in the Supermarket Industry (July 26, 2010). Review of Industrial Organization, Vol. 38, No. 1, 2011, Available at SSRN: https://ssrn.com/abstract=1650912

Mitsuru Igami (Contact Author)

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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