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The Effect of Wal‐Mart Supercenters on Grocery Prices in New England
Author(s) -
Volpe Richard J.,
Lavoie Nathalie
Publication year - 2008
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1111/j.1467-9353.2007.00389.x
Subject(s) - business , grocery shopping , new england , agricultural economics , economics , marketing , market economy , middle class
The competitive price effect of Wal‐Mart Supercenters on national brand and private label grocery prices in New England is examined. We use primary price data collected on several identical products from six Supercenters in Massachusetts, Connecticut, and Rhode Island and from conventional supermarkets. Taking into account demographics, store characteristics, and market conditions, we show that Wal‐Mart decreases prices by 6 to 7% for national brand goods and by 3 to 8% for private label goods. Price decreases are most significant in the dry grocery and dairy departments. Moreover, Wal‐Mart sets grocery prices significantly lower than its competitors.