An Empirical Analysis of the Effect of Large Discount Stores on Agricultural Product Prices
2015
Chae, S.H., The University of Seoul, Seoul, Republic of Korea | Sung, N.I., The University of Seoul, Seoul, Republic of Korea
This study examines the effects of large discount stores on agricultural product prices(so-called Wal-Mart effect) through an empirical analysis using regional panel data of 37 cities for the 1993 ~ 2012 period. The agricultural product prices are measured by the consumer price index(CPI) for agricultural products. The empirical results indicate that the presence of large discount stores, measured by the number or size of large discount stores per people, tends to have no effect on agricultural prices, with other regional variables being controlled for. In other words, the results do not confirm the presence of Wal-Mar effect in the agricultural product market in Korea. The study provides five alternative hypotheses on the reasons for lack of Wal-Mart effect. In addition, the study suggests that the government should pay special attention to the management innovation of medium-sized and/or small retail establishments.
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