Show simple item record Ellickson, Paul en_US 2010-06-28T19:04:54Z 2010-06-28T19:04:54Z 2007-10-12 en_US
dc.identifier.citation Ellickson, P. B. "Does Sutton Apply to Supermarkets?" Rand Journal of Economics 38.1 (2007): 43-59. Print.
dc.description.abstract This paper presents empirical evidence that endogenous fixed costs play a central role in determining the equilibrium structure of the supermarket industry. Using the framework developed in Sutton (1991), I construct a model of supermarket competition where escalating investment in firm level distribution systems is driven by the incentive to produce a greater variety of products in every store. Using the observed networks of store and warehouse locations, I identify 51 distinct geographic markets covering nearly the entire United States and empirically verify their relative independence. Employing a store level census, I demonstrate that the industrial organization of these markets is a natural oligopoly in which a small number of firms (between 4 and 6) capture the majority of sales, regardless of market size. While the total number of firms does scale up with the size of the market, the expansion is limited to a competitive fringe of low quality stores. en_US
dc.format.extent 1114813 bytes
dc.format.mimetype application/pdf
dc.language.iso en_US
dc.publisher Wiley-Blackwell
dc.relation.isversionof doi:10.1111/j.1756-2171.2007.tb00043.x
dc.subject endogenous fixed costs en_US
dc.subject natural oligopoly en_US
dc.subject retail en_US
dc.subject supermarkets en_US
dc.subject vertical product differentiation en_US
dc.title Does Sutton apply to supermarkets? en_US
dc.type Journal Article en_US
dc.department Economics

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