Empirical Games of Market Entry and Spatial Competition in Retail Industries

37 Pages Posted: 10 Feb 2015

See all articles by Victor Aguirregabiria

Victor Aguirregabiria

University of Toronto - Department of Economics

Junichi Suzuki

University of Toronto - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 2015

Abstract

We survey the recent empirical literature on structural models of market entry and spatial competition in oligopoly retail industries. We start with the description of a framework that encompasses various models that have been estimated in empirical applications. We use this framework to discuss important specification assumptions in this literature: firm heterogeneity; specification of price competition; structure of spatial competition; firms' information; dynamics; multi-store firms; and structure of unobservables. We next describe different types of datasets that have been used in empirical applications. Finally, we discuss econometric issues that researchers should deal with in the estimation of these models, including multiple equilibria and unobserved market heterogeneity. We comment on the advantages and limitations of alternative estimation methods, and how these methods relate to identification restrictions. We conclude with some issues and topics for future research.

Keywords: econometrics of discrete choice games, market entry and exit, retail industries, spatial competition

JEL Classification: L11, L13, L81, R30

Suggested Citation

Aguirregabiria, Victor and Suzuki, Junichi, Empirical Games of Market Entry and Spatial Competition in Retail Industries (February 2015). CEPR Discussion Paper No. DP10410, Available at SSRN: https://ssrn.com/abstract=2562975

Victor Aguirregabiria (Contact Author)

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
4169784358 (Phone)

HOME PAGE: http://individual.utoronto.ca/vaguirre/

Junichi Suzuki

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S3G7
Canada

HOME PAGE: http://individual.utoronto.ca/suzuki/

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