Estimation and analysis of entry and exit of big box retailers
Abstract/Contents
- Abstract
- This dissertation offers analysis of competition, entry, and exit in concentrated markets, featuring new data and new methodologies in the context of big-box store exit, organizational form and measuring equilibrium selection mechanisms for entry games. First, I study the effect on consumers and businesses when a big-box chain, which competes in discount retail and groceries, closed several stores in early 2016. I analyze roughly 30 million VISA credit card transactions in four markets between January 2015 through December 2017, which covers a time period before and after the big-box chain closed its stores. I estimate a difference-in-difference causal effect, with the first difference being before and after the closings and the second difference being consumers who shopped versus did not shop at the big-box chain. I find that consumers who shopped at the big-box chain spent 12%-17% more on groceries after the store closing, with spending in other categories decreasing. I also find that mom-and-pop stores had 1%-14% larger revenue growth compared to large merchants in the second year after the closings. Second, I study competition between big-box and retail cooperative chains in the home improvement industry during the Great Recession. The former are typically run from a central headquarters and are comprised of many physically large locations, while the latter consist of smaller, independently operated locations using the same brand title. Both have access to supply networks and brand name effects, which a non-franchised or non-cooperative independent store would not have access to. I find that competition mostly happens between firms of the same type, with the effect on entry and exit across these two firm types being small. Finally, I develop a procedure that extends a method developed by Bresnahan and Reiss (1991) for estimation of static two-player entry games. The procedure recovers characteristics of the equilibrium selection mechanism to allow for more accurate counterfactual estimation. I present simulations that evaluate the performance of the procedure, showing that it can identify which equilibrium selection mechanism is present in an industry. I apply the methodology to data on home improvement store expansion during the Great Recession, estimating the counterfactual amount of expansion that Home Depot and Lowes would have made in the absence of the Great Recession. I find that even without the Great Recession, the two firms would have engaged in little more expansion than they actually did
Description
| Type of resource | text |
|---|---|
| Form | electronic resource; remote; computer; online resource |
| Extent | 1 online resource |
| Place | California |
| Place | [Stanford, California] |
| Publisher | [Stanford University] |
| Copyright date | 2020; ©2020 |
| Publication date | 2020; 2020 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Author | Zhang, Leon |
|---|---|
| Degree supervisor | Wolak, Frank A |
| Thesis advisor | Wolak, Frank A |
| Thesis advisor | Hong, Han |
| Thesis advisor | Larsen, Bradley J |
| Thesis advisor | Stojanovski, Ognen |
| Degree committee member | Hong, Han |
| Degree committee member | Larsen, Bradley J |
| Degree committee member | Stojanovski, Ognen |
| Associated with | Stanford University, Department of Economics |
Subjects
| Genre | Theses |
|---|---|
| Genre | Text |
Bibliographic information
| Statement of responsibility | Leon Zhang |
|---|---|
| Note | Submitted to the Department of Economics |
| Thesis | Thesis Ph.D. Stanford University 2020 |
| Location | electronic resource |
Access conditions
- Copyright
- © 2020 by Leon Zhang
- License
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
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