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Review of Industrial Organization

, Volume 44, Issue 1, pp 73–93 | Cite as

Supermarket Entry and the Survival of Small Stores

  • Fernando Borraz
  • Juan Dubra
  • Daniel Ferrés
  • Leandro ZipitríaEmail author
Article

Abstract

We analyze the effect of supermarket entry on the exit of small stores in the food retailing sector in Montevideo between 1998 and 2007. We use detailed geographical information to identify the link between supermarket entry and the exit of nearby small stores. Entry of supermarkets using small- to medium-size formats creates a competitive threat for the existing small stores, decreasing their probability of survival. The result is robust to several model specifications and varying definitions of what constitutes a supermarket. The impact of supermarket entry is unequivocal for groceries, bakeries, fresh pasta shops, and butcher shops.

Keywords

Supermarket entry Competition Small store attrition 

Notes

Acknowledgments

This paper was prepared as part of a research project, funded by the International Development Research Centre (IDRC). We are grateful for IDRC’s support. We also would like to thank the following people and organizations: the Intendencia Municipal de Montevideo, mainly the Servicio de Regulación Alimentaria, the Contralor de Edificación (Mr. Germán Prat), and Mr. Gustavo Lancibidad, for providing us the data for this study; the Asociación de Supermercados and IDRetail for the data base on supermarket size; the INAC for the data base on butcher shops; and Catalina Maissonave, Bruno Petrúngaro and Antonella Nappa for their excellent research assistance. We also thank Stephanie Shellman for a careful reading of a previous version of this paper. Finally, we are grateful to the editor, Lawrence White, and two anonymous referees for comments and suggestions. Part of this research was carried out while Zipitría worked for the Ministry of Economics and Finance (MEF) of Uruguay. The opinions expressed in this paper are those of the authors, and not those of the Central Bank of Uruguay or the MEF.

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Fernando Borraz
    • 1
    • 2
  • Juan Dubra
    • 3
  • Daniel Ferrés
    • 3
    • 4
  • Leandro Zipitría
    • 3
    • 5
    Email author
  1. 1.Banco Central del UruguayMontevideoUruguay
  2. 2.dECON-FCS-UdelaRMontevideoUruguay
  3. 3.Universidad de MontevideoMontevideoUruguay
  4. 4.IESE Business SchoolBarcelonaSpain
  5. 5.Universidad de San AndrésBuenos AiresArgentina

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