Does Sutton apply to supermarkets?
I present 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 sys...
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| Veröffentlicht in: | The Rand journal of economics 2007-03, Vol.38 (1), p.43-59 |
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| container_title | The Rand journal of economics |
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| creator | Ellickson, Paul B. |
| description | I present 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. Employing a store-level census and 51 distinct geographic markets, I demonstrate that the supermarket industry is a natural oligopoly in which a small number of firms (between four and six) capture the majority of sales, regardless of market size. |
| doi_str_mv | 10.1111/j.1756-2171.2007.tb00043.x |
| format | Article |
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Employing a store-level census and 51 distinct geographic markets, I demonstrate that the supermarket industry is a natural oligopoly in which a small number of firms (between four and six) capture the majority of sales, regardless of market size.</description><subject>Business studies</subject><subject>Chain stores</subject><subject>Competition</subject><subject>Economic models</subject><subject>Empirical research</subject><subject>Evaluation</subject><subject>Financial investments</subject><subject>Fixed costs</subject><subject>Fringe</subject><subject>Industrial economics</subject><subject>Industrial market</subject><subject>Industrial organization</subject><subject>Location of enterprises</subject><subject>Market size</subject><subject>Marketing</subject><subject>Oligopolies</subject><subject>Oligopoly</subject><subject>Retail industries</subject><subject>Retail 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| source | Business Source Complete; JSTOR Archive Collection A-Z Listing; Wiley Online Library All Journals |
| subjects | Business studies Chain stores Competition Economic models Empirical research Evaluation Financial investments Fixed costs Fringe Industrial economics Industrial market Industrial organization Location of enterprises Market size Marketing Oligopolies Oligopoly Retail industries Retail trade Studies Supermarkets U.S.A |
| title | Does Sutton apply to supermarkets? |
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