The role of geographic market definition in analysis of grocery retailing

IF 4.2 2区经济学 Q1 AGRICULTURAL ECONOMICS & POLICY

American Journal of Agricultural Economics Pub Date : 2024-02-20 DOI:10.1111/ajae.12461

Yanghao Wang, Metin Çakır, Timothy A. Park

{"title":"The role of geographic market definition in analysis of grocery retailing","authors":"Yanghao Wang, Metin Çakır, Timothy A. Park","doi":"10.1111/ajae.12461","DOIUrl":null,"url":null,"abstract":"We examine how estimates of household food demand elasticities and store profit margins vary with alternative geographic market extents using structural models of household store choice and retailer competition. Our consumer store choice model is novel, simultaneously accounting for the heterogeneity of store choice sets, households' travel distance to stores, and their store-specific shopping basket prices. We estimate the models using a unique combination of datasets on grocery purchases. We find that the geographic market extent is positively associated with household demand elasticity and negatively associated with store profit margins. The maximum market extent at which changes in demand elasticities become statistically insignificant varies by retailers, ranging between 10 and 16 km. These findings are robust to alternative assumptions of store competition. Our results imply that overlooking the locality of retail competition can result in overestimating the magnitudes of household demand elasticities while underestimating store profit margins, characterizing a relatively more competitive market.","PeriodicalId":55537,"journal":{"name":"American Journal of Agricultural Economics","volume":"2 1","pages":""},"PeriodicalIF":4.2000,"publicationDate":"2024-02-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"American Journal of Agricultural Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1111/ajae.12461","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"AGRICULTURAL ECONOMICS & POLICY","Score":null,"Total":0}

引用次数: 0

Abstract

We examine how estimates of household food demand elasticities and store profit margins vary with alternative geographic market extents using structural models of household store choice and retailer competition. Our consumer store choice model is novel, simultaneously accounting for the heterogeneity of store choice sets, households' travel distance to stores, and their store-specific shopping basket prices. We estimate the models using a unique combination of datasets on grocery purchases. We find that the geographic market extent is positively associated with household demand elasticity and negatively associated with store profit margins. The maximum market extent at which changes in demand elasticities become statistically insignificant varies by retailers, ranging between 10 and 16 km. These findings are robust to alternative assumptions of store competition. Our results imply that overlooking the locality of retail competition can result in overestimating the magnitudes of household demand elasticities while underestimating store profit margins, characterizing a relatively more competitive market.

查看原文本刊更多论文

地理市场定义在杂货零售分析中的作用

我们利用家庭商店选择和零售商竞争的结构模型，研究了家庭食品需求弹性和商店利润率的估计值如何随不同的地理市场范围而变化。我们的消费者商店选择模型很新颖，同时考虑了商店选择集的异质性、家庭到商店的旅行距离以及商店特定的购物篮价格。我们使用独特的杂货购买数据集组合对模型进行了估算。我们发现，地理市场范围与家庭需求弹性呈正相关，而与商店利润率呈负相关。不同零售商的需求弹性变化在统计上变得不显著的最大市场范围各不相同，在 10 到 16 千米之间。这些研究结果对其他商店竞争假设都是可靠的。我们的结果表明，忽视零售业竞争的地域性会导致高估家庭需求弹性的大小，同时低估商店的利润率，从而使市场竞争相对更加激烈。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

American Journal of Agricultural Economics 管理科学-农业经济与政策

CiteScore

9.10

自引率

4.80%

发文量

审稿时长

12-24 weeks

期刊介绍： The American Journal of Agricultural Economics provides a forum for creative and scholarly work on the economics of agriculture and food, natural resources and the environment, and rural and community development throughout the world. Papers should relate to one of these areas, should have a problem orientation, and should demonstrate originality and innovation in analysis, methods, or application. Analyses of problems pertinent to research, extension, and teaching are equally encouraged, as is interdisciplinary research with a significant economic component. Review articles that offer a comprehensive and insightful survey of a relevant subject, consistent with the scope of the Journal as discussed above, will also be considered. All articles published, regardless of their nature, will be held to the same set of scholarly standards.