Empirical Games of Market Entry and Spatial Competition in Retail Industries

Handbook on the Economics of Retail and Distribution, Chapter 9, pp 201-233. Emek Basker (editor). (January 2016), Edward Elgar Publishing

40 Pages Posted: 4 Nov 2016

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 8, 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: Retail industries, Market entry and exit, Spatial competition, Econometrics of discrete choice games

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 8, 2015). Handbook on the Economics of Retail and Distribution, Chapter 9, pp 201-233. Emek Basker (editor). (January 2016), Edward Elgar Publishing, Available at SSRN: https://ssrn.com/abstract=2860928

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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