El Departamento de Economía de la Universidad de Chile le invita a participar en el Seminario Académico: 

Título:  A new supermarket in the neighborhood: The price reaction of incumbent retailers

Autor(es):  Anett Erdmannyand -Javier Asensio

Presenta:  Anett Erdmannyand

Lugar y hora: Miércoles 29 de marzo de 2017, 13:00 hrs. Sala P 301, Edificio Tecnoaulas (Diagonal Paraguay 257)

Abstract

This paper studies empirically the volatility of retail price indexes at the store level as a

result of changes in the local market structure within an urban market. Using a reducedform

pricing equation, the standard approach bases the analysis of a potential competition

e ect on the number of rms in the market at a certain point in time. We decompose the

competition e ect in the e ect of incumbent retailers and the e ect of new grocery store

openings. Considering the Spanish supermarket industry, which is strongly regulated, we

make use of panel data and use a rst-di erence approach to estimate a distributed-lag

model. The results suggest an instantaneous price reaction to entry which is smaller than

the long-term competition e ect of an incumbent rm. Possible explanations are constrained

price- flexibility for incumbent rms in the short run or di culties of the entrant

in establishing themselves as coequal rivals. We nd that this gradual price reaction is

especially pronounced for supermarkets positioned in the middle price-segment, and the

strongest price reaction has been found for high-price retailers.

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