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Sales and Firm Entry: The Case of Wal-Mart
Economics Faculty Working Papers
  • PJ Glandon, Kenyon College
  • Matthew Jaremski, Colgate University
Document Type
Working Paper
Publication Date
JEL Codes
E30, L11, L13
Working Paper Number
Temporary price reductions or “sales” have become increasingly important in the evolution of the price level. We present a model of repeated price competition to illustrate how entry causes incumbents to alternate between high and low prices. Using a six year panel of weekly observations from a grocery chain, we find that individual stores employ more sales as the distance to Wal-Mart falls. Moreover, the increase in the frequency of sales was concentrated on the most popular products, suggesting the use of a loss-leader strategy.
Citation Information
PJ Glandon and Matthew Jaremski. "Sales and Firm Entry: The Case of Wal-Mart" (2012)
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