Thursday, April 11, 2013
Posted by D. Daniel Sokol
Fernando Borraz Universidad de la Republica - Faculty of Social Sciences; Central Bank of Uruguay, Juan Dubra, University of Montevideo - Department of Economics, Daniel Ferres, University of Montevideo - Department of Economics, and Leandro Zipitria, Universidad de Montevideo research Supermarket Entry and the Survival of Small Stores.
ABSTRACT: 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.