Wal-Mart's Benefits

by Don Boudreaux on December 8, 2005

in Competition, Wal-Mart

This new NBER paper, by Jerry Hausman and Ephriam Leibtag, finds that big-box retailers such as Wal-Mart bring enormous benefits to consumers — and especially to low-income consumers.  Here’s the abstract:

Consumers often benefit from increased competition in differentiated product settings. In this paper we consider consumer benefits from increased competition in a differentiated product setting: the spread of non-traditional retail outlets. In this paper we estimate consumer benefits from supercenter entry and expansion into markets for food. We estimate a discrete choice model for household shopping choice of supercenters and traditional outlets for food. We have panel data for households so we can follow their shopping patterns over time and allow for a fixed effect in their shopping behavior. We find the benefits to be substantial, both in terms of food expenditure and in terms of overall consumer expenditure. Low income households benefit the most.

Who’d a’thunk it?

(Hat tip to Karol.)

Comments    Share Share    Print Print    Email Email

  • Why on earth would you link to a version of a paper behind a toll-access barrier? No one can read the NBER copy. The author's FREE copy of the paper is at


    http://econ-www.mit.edu/faculty/download_pdf.php?id=1243


    You should always link to the author's free copy. Readers get no benefit from paying NBER US$ 5 for a peek that the author would like to give away.


  • save_the_rustbelt

    Consumers need Wal-Marts benefits.


    Our economy has become quite adept at destroying $20-an-hour jobs and creating $9-an-hour jobs.


    And how did Wal-Mart get special treatment from the Department of Labor? The best politicians money can buy.

  • Wal-Mart bashing is really picking up a head of steam lately.

  • spencer

    Walmart is being scapegoated for a lot of economic problems that are not WMT's fault.

  • Helen'skid

    "In this paper we estimate consumer benefits from supercenter entry and expansion into markets for food. We estimate a discrete choice model for household shopping choice of supercenters and traditional outlets for food."


    The words "we estimate" hardly stick out.


    Who'd a'thunk it?

  • Randy

    Its interesting how the anti-Walmart folks have been able to set the terms of the debate. Here we have an article that defends the supercenters on the grounds that they benefit low-income households. True enough - but the best defense of Walmart is that it is making money. It does this by providing a service that its customers want. And yes, the shareholders are making money. That is what SHOULD happen when a corporation provides a service that its customers want. The answer to those who oppose Walmart is; if you don't like the way Walmart does business, then compete against it. Set up a non-profit big box operation that pays high wages and good benefits, and only buys and sells products made in America. Yes, this may be difficult. You think Sam Walton had it easy? He started small and kept building. Bottom line; if you're not willing to compete, to put your money where your mouth is, you won't be taken seriously.

blog comments powered by Disqus

Previous post:

Next post: