Description:

Miguel Talamás Marcos (Northwestern University): "David vs Goliath: Mexican Corner Stores Facing Convenience Chains" 

Abstract: This paper studies how one of the most prevalent forms of microenterprises, the corner store, responds to increasing competition of large convenience chains. To address the endogenous entry problem, this paper leverages time and market fixed effects with an instrumental variable based on a cost shifter for convenience chains - regional economies of scale - and suitability for convenience chains measured by street width. Convenience chains lead to a reduction in the number of corner stores. This effect is not driven by an increase in exits of corner stores, but by deterring their entry. The managerial advantages of the corner stores being owner-operated allows them to remain productive and keep their core customers.