Files
Abstract
This dissertation comprises two essays on superstar firms and consumer welfare in the US retail sector. The first essay investigates how the entry of big-box stores affects household consumption and welfare. It presents empirical evidence that after supercenters and warehouse clubs enter, households change various dimensions of their shopping behavior in waysthat are strongly consistent with store characteristics. It further provides a novel multi-store multi-category choice model to quantify and disentangle the effects of product variety, prices, and other store characteristics on consumer welfare, highlighting the importance of variety and one-stop shopping experience. The second essay focuses on market concentration in retailing. It documents a rise in household retail concentration and increased one-stop shopping over the past two decades and explores the driving forces behind. On the supply side, increasing local availability of superstar retailers, rises in product variety, and changes in pricing explain a portion of these trends. On the demand side, increases in households’ opportunity cost of time are also key drivers. A model is developed to rationalize these results and provide the implications for market power and welfare.