Dollar Store Expansion, Food Retail Competition, and Rural Employment
2023
Marchesi, Keenan | Lopez, Rigoberto | Steinbach, Sandro
This paper studies the impact of dollar store entry on independent grocery retailers using establishment-level data for the United States from 2000 to 2019. We exploit the unique spatial and temporal features of our dataset to estimate the causal e ects of dollar store exposure on the economic outcomes of independent grocery retailers. Our main results show that independent grocery retailers are 2.3 percent more likely to exit after dollar store entry, with a ected grocery retailers experiencing an employment reduction of 3.7 percent and lower sales of 5.7 percent. In addition, we show that the exit probability of independent grocery retailers is almost three times larger in rural than urban communities. After dollar store entry, retail employment decreases by 7.1 percent, while sales fall by 9.2 percent for independent grocery retailers in rural census tracts. Finally, event studies show that the response of independent grocery retailers to dollar store entry is delayed, with the exit probability being indi erent from zero one year after dollar store entry. Those adverse entry effects are more pronounced and persistent in rural communities, re ecting increased exit rates, higher job losses, and consistently depressed sales among independent grocery retailers.
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