TY  - JOUR
AU  - Courtemanche,Charles J.
AU  - Carden,Art
TI  - Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17220
PY  - 2011
Y2  - July 2011
UR  - http://www.nber.org/papers/w17220
L1  - http://www.nber.org/papers/w17220.pdf
N1  - Author contact info:
Charles J. Courtemanche
Georgia State University
Andrew Young School of Policy Studies
Department of Economics
P.O. Box 3992
Atlanta, GA 30302-3992
Tel: 404-413-0082
Fax: 404-413-0145
E-Mail: ccourtemanche@gsu.edu

Art Carden
Department of Economics and Business
Rhodes College
2000 N. Parkway
Memphis TN 38112
Tel: 901-843-3829
Fax: 901-843-3736
E-Mail: cardena@rhodes.edu
AB  - Prior research shows grocery stores reduce prices to compete with Walmart Supercenters.  This study finds evidence that the competitive effects of two other big box retailers – Costco and Walmart-owned Sam's Club – are quite different.  Using city-level panel grocery price data matched with a unique data set on Walmart and warehouse club locations, we find that Costco entry is associated with higher grocery prices at incumbent retailers, and that the effect is strongest in cities with small populations and high grocery store densities.  This could be explained by a segmented-market model, or by incumbents competing with Costco along non-price dimensions such as product quality or quality of the shopping experience.  We find no evidence that Sam’s Club entry affects grocery stores’ prices, consistent with Sam’s Club’s focus on small businesses instead of consumers.
ER  -