HUI Working Papers, HUI Research
Daniel Brandt, Zuzana Macuchova
Entry in the Swedish Wholesale Trade Sector: Does Market Definition Matter?
() and Niklas Rudholm
Abstract: Entry of firms into local markets has often been studied
using administrative areas such as municipalities as the assumed relevant
markets to study. However, administrative areas and the actual relevant
markets based on local demand for firmsí products often need not coincide,
which could bias the results of studies treating administrative areas as
the relevant markets. Based on a behavioural assumption regarding how
retailers act when purchasing products from wholesale trade firms, we
create alternative markets using Voronoi diagrams. We then compare the
empirical results of investigating the determinants of entry using
municipalities as the relevant markets with the results obtained using the
Voronoi markets. The results indicate that, in both cases, the same
variables are statistically significant in affecting entry, though the
estimated effects differ in size.
Keywords: Firm entry; market delineation; entrepreneurship; regional economics; count data; (follow links to similar papers)
JEL-Codes: L13; L81; R12; (follow links to similar papers)
22 pages, March 15, 2013
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