IDEAS home Printed from https://ideas.repec.org/a/wly/ajagec/v107y2025i1p208-230.html
   My bibliography  Save this article

The role of geographic market definition in analysis of grocery retailing

Author

Listed:
  • Yanghao Wang
  • Metin Çakır
  • Timothy A. Park

Abstract

We examine how estimates of household food demand elasticities and store profit margins vary with alternative geographic market extents using structural models of household store choice and retailer competition. Our consumer store choice model is novel, simultaneously accounting for the heterogeneity of store choice sets, households' travel distance to stores, and their store‐specific shopping basket prices. We estimate the models using a unique combination of datasets on grocery purchases. We find that the geographic market extent is positively associated with household demand elasticity and negatively associated with store profit margins. The maximum market extent at which changes in demand elasticities become statistically insignificant varies by retailers, ranging between 10 and 16 km. These findings are robust to alternative assumptions of store competition. Our results imply that overlooking the locality of retail competition can result in overestimating the magnitudes of household demand elasticities while underestimating store profit margins, characterizing a relatively more competitive market.

Suggested Citation

  • Yanghao Wang & Metin Çakır & Timothy A. Park, 2025. "The role of geographic market definition in analysis of grocery retailing," American Journal of Agricultural Economics, John Wiley & Sons, vol. 107(1), pages 208-230, January.
    • Handle: RePEc:wly:ajagec:v:107:y:2025:i:1:p:208-230
    DOI: 10.1111/ajae.12461
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ajae.12461
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ajae.12461?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:ajagec:v:107:y:2025:i:1:p:208-230. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1467-8276 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.