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Supermarkets versus local shopping: Welfare implications of retail provision mode

Authors
Journal
Economics Letters
0165-1765
Publisher
Elsevier
Volume
124
Issue
3
Identifiers
DOI: 10.1016/j.econlet.2014.06.023
Keywords
  • Market Expansion Effects
  • Monopolistic Competition
  • Consumer Welfare

Abstract

Highlights • Model local shopping as a continuum of monopolistic competitors around a Salop (1979) circle. • Single monopoly retailer provides lower prices and greater variety than local stores. • Some consumers are made worse off by monopoly provision, hidden by aggregate conclusion. • Full market coverage by monopolist can still produce this result. • Policy makers should take care in deciding optimum method for provision.

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