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Firm entry in the Swedish wholesale trade sector: Does market definition matter?

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  • Daniel Brandt
  • Zuzana Macuchova
  • Niklas Rudholm

Abstract

Firm entry into local markets has often been studied using administrative areas such as municipalities as the assumed relevant markets. However, administrative areas and the actual relevant markets based on local demand for firms’ products often do not coincide, which could bias the results of studies treating administrative areas as the relevant markets. Based on a behavioral assumption regarding how retailers act when purchasing products from wholesale trade firms, we create alternative markets using Voronoi diagrams. We then compare the empirical results of investigating the determinants of firm entry using municipalities as the relevant markets with the results obtained using Voronoi markets. The results indicate that, in both cases, the same variables are statistically significant in affecting entry, though the estimated effects differ in size. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Daniel Brandt & Zuzana Macuchova & Niklas Rudholm, 2014. "Firm entry in the Swedish wholesale trade sector: Does market definition matter?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(3), pages 703-717, November.
    • Handle: RePEc:spr:anresc:v:53:y:2014:i:3:p:703-717
    DOI: 10.1007/s00168-014-0639-8
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    References listed on IDEAS

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    More about this item

    Keywords

    L13; L81; R12;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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