infonet-economy

This paper empirically examines the business-stealing effect of store entry in the Swiss grocery retail industry. A uniquely spatially detailed dataset of all Swiss retail stores and residents is constructed, that captures important drivers of demand and competition with great detail. I employ Entropy Balancing to control for systematic differences across local markets and provide non-parametric estimates of local entry effects. I find that markets for grocery retailing stores are highly localized in a tight 4 kilometer radius. Larger retailing stores react more on the intensive margin to entry and contract their employment hours and numbers, while smaller stores are particularly impacted on the extensive margin. In addition, I find evidence that the local market size for a small store is smaller than for a large store.