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E-commerce continues its expansion, and most retail groups have opened online distribution channels in the French grocery market. Using purchasing data, I develop a store choice model and a supply model to estimate the effect of the online distribution channel on consumer welfare and retail competition. E-commerce leads to a small decrease in consumer surplus. Furthermore, only online leaders obtain more market shares and profits while the majority of retailers globally get lower market shares and profits with e-commerce.

The Effect of E-Commerce on Grocery Store Choice and Retail Competition