Estimados/as Académicos/as,

Les extendemos la invitación al seminario que organiza el Departamento de Economía, en el que se presentará el trabajo titulado "Defensive Specialization: Theory and Evidence from Mexico's Retail Sector".

Expone: Luis Cabral, Paganelli-Bull Professor of Economics and International Business, NYU.

Coautores: Tomasso Bondi, Shreya Kankanhalli y Miguel Angel Talamas Marcos

Abstract: Large companies — both offline and online — are increasingly dominating the retail industry, casting doubt on the future of independent, local retailers. Is this the end of local retail as we know it? What product strategy should local stores follow to attenuate this negative impact? We show that, in response to increasing penetration of large chains, local retailers — and particularly smaller ones — optimally follow a strategy of defensive specialization: they increase variety within selected product categories while forgoing other categories. Intuitively, the arrival of large chains hurts all independent local stores, but it disproportionately harms general stores that sell multiple categories. Our empirical evidence, built on microdata from retail censuses and surveys from Mexico, confirms the predictions of the theoretical model: specialty stores are better able to cope with the shock of large-chain entry. Moreover, when the size disadvantage is large enough, the entry of a large chain induces a shift toward greater specialization in the traditional retail sector, both through an increase in the absolute number and market share of specialty stores and through changes in the product offerings within local stores towards more specialization. These findings challenge conventional wisdom on small store survival in both developing and developed economies and add critical nuance to the ongoing debate on the role played by small vs. large retailers on product variety and consumer welfare.

El formato será presencial en la sala P-303.

Saludos cordiales,

Dirección de Investigación