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Are Multinational Retailers Really Selling at Lower Prices Than Domestic Chains? Evidence from Three Sectors

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  • José Caraballo-Cueto

Abstract

Currently, there is no systematic evidence showing that, 15 years or more after entry, all multinational retailers provide lower prices than domestic buying groups. In the short term, some multinational retailers may lower prices to deter local competitors and attract consumers in a ‘loss leader’ strategy. However, domestic competitors can integrate buying groups to share the benefit of economies of scale with multinational retailers, while holding lower profitability requirements and overhead costs than multinational retailers. We compared multinational retailers to domestic buying groups in a jurisdiction that had one of the highest proportions of Walgreens and Walmart stores in the world. Despite their market power, in our representative samples of goods, there is no evidence that the prices of multinational retailers in the sectors of pharmacies, supermarkets and hardware stores are lower than domestic chains. JEL Codes: M3, R1, L8, F2

Suggested Citation

  • José Caraballo-Cueto, 2019. "Are Multinational Retailers Really Selling at Lower Prices Than Domestic Chains? Evidence from Three Sectors," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 13(1), pages 49-82, February.
    • Handle: RePEc:sae:mareco:v:13:y:2019:i:1:p:49-82
    DOI: 10.1177/0973801018800082
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    References listed on IDEAS

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    More about this item

    Keywords

    FDI; Retailers; Price; Competitiveness;
    All these keywords.

    JEL classification:

    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • L8 - Industrial Organization - - Industry Studies: Services
    • F2 - International Economics - - International Factor Movements and International Business

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