Review of Industrial Organization

, Volume 38, Issue 1, pp 1-21

First online:

Open Access This content is freely available online to anyone, anywhere at any time.

Does Big Drive Out Small?

Entry, Exit, and Differentiation in the Supermarket Industry


This paper measures the impact of the entry of large supermarkets on incumbents of various sizes. Contrary to the conventional notion that big stores drive small rivals out of the market, data from Tokyo in the 1990s show that large supermarkets’ entry induces the exit of existing large and medium-size competitors, but improves the survival rate of small supermarkets. These findings highlight the role of store size as an important dimension of product differentiation. Size-based entry regulations would appear to protect big incumbents, at the expense of small incumbents and potential entrants.


Deregulation Entry and exit Product differentiation Retail

JEL Classification

L11 L13 L51 L81