<scp>Empirical Analysis of Competition between Wal‐Mart and Other Retail Channels</scp>

Abstract

This paper quantifies the degree of competition between Wal‐Mart and different retail channels by exploiting a unique dataset that describes a consumer's choice of store. Using a discrete choice model, I estimate a consumer's choice of retailer in the sales market for DVDs among online, mass merchant, electronics, video specialty, and music stores. Wal‐Mart competes more intensely with other mass merchants, and conditional on price and distance, the average consumer still prefers Wal‐Mart to most other stores. I also consider a counterfactual experiment regarding the entry of Wal‐Mart into 15 proposed store sites into California.