We study the grocery industry in Washington, DC, during the Great Depression using data from the 1929 Census of Distribution, a 1929'1930 survey by the Federal Trade Commission, and a 1935 business directory. We first document the differences between chains and independents in the Washington, DC, grocery market circa 1929 to better understand chains' competitive advantages. Second, we study correlates of survival from 1929 to 1935, a period of major contraction and upheaval. We find that more productive stores survived at higher rates, as did stores with greater assortment and lower prices. Presaging the supermarket revolution, combination stores were much more likely to survive to 1935 than other grocery formats.
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Raising the Barcode Scanner: Technology and Productivity in the Retail Sector
May 2011
Working Paper Number:
CES-11-16R
Barcodes and barcode scanners transformed the grocery industry in the 1970s. I use store-level data from the 1972, 1977, and 1982 Census of Retail Trade, matched to data on store scanner installations, to estimate scanners' effect on labor productivity. I find that early scanners increased a store's labor productivity, on average, by approximately 4.5 percent in the first few years. The effect was larger in stores carrying more packaged products, consistent with the presence of network externalities. Short-run gains were small relative to fixed costs, suggesting that the impediment to widespread adoption of the new technology was profitability, not coordination problems.
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Supersize It: The Growth of Retail Chains and the Rise of the "Big Box" Retail Format
August 2008
Working Paper Number:
CES-08-23R
This paper documents and explains the recent rise of "big-box" general merchandisers. Data from the Census of Retail Trade for 1977-2007 show that general-merchandise chains grew much faster than specialist retail chains, and that general merchandisers that added the most stores also made the biggest increases to their product offerings. We explain these facts with a stylized model in which a retailer's scale economies interact with consumer gains from one-stop shopping to generate a complementarity between a retailer's scale and scope.
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Customer-Employee Substitution: Evidence from Gasoline Stations*
January 2015
Working Paper Number:
CES-15-45R
We document the adoption of self-service pumps in U.S. gasoline stations from 1977 to 1992. Using establishment-level data from the Census of Retail Trade over this period, we show that self-service stations employ approximately one quarter fewer attendants per pump, all else equal. The work done by these attendants has shifted to customers, biasing upwards conventional measures of productivity growth.
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TAKEN BY STORM: BUSINESS SURVIVAL IN THE AFTERMATH OF HURRICANE KATRINA
April 2014
Working Paper Number:
CES-14-20
We use Hurricane Katrina's damage to the Mississippi coast in 2005 as a natural experiment to study business survival in the aftermath of a cost shock. We find that damaged establishments that returned to operation were more resilient than those that had never been damaged. This effect is particularly strong for establishments belonging to younger and smaller rms. The effect of damage on establishments in older and larger chains was more limited, and they were subsequently less resilient having survived the damage. These selection effects persist up to five years after the initial shock. We interpret these findings as evidence that the effect of the shock is tied to the presence of financial and other constraints.
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Making a Motivated Manager: A Census Data Investigation into Efficiency Differences Between Franchisee and Franchisor-Owned Restaurants
January 2016
Working Paper Number:
CES-16-54
While there has been significant research on the reasons for franchising, little work has examined the effects of franchising on establishment performance. This paper attempts to fill that gap. We use restricted-access US Census Bureau microdata from the 2007 Census of Retail Trade to examine establishment-level productivity of franchisee- and franchisor-owned restaurants. We do this by employing a two-stage data envelopment analysis model where the first stage uses DEA to measure each establishment's efficiency. The DEA efficiency score is then used as the second-stage dependent variable. The results show a strong and robust effect attributed to franchisee ownership for full service restaurants, but a smaller and insignificant difference for limited service restaurants. We believe the differences in task programability between limited and full service restaurants results in a very different role for managers/franchisees and is the driving factor behind the different results.
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THE AGGREGATE IMPACT OF ONLINE RETAIL
April 2014
Working Paper Number:
CES-14-23
To study the impact of online retail on aggregate welfare, I use a spatial model to calculate a new measure of store level retail productivity and each store's equilibrium response to increased competitive pressure from online retailers. The model is estimated on confidential store-level data spanning the universe of US retail stores, detailed local-level demographic data and shortest-route data between locations. From counterfactual exercises mimicking improvements in shipping and increased internet access, I estimate that improvements in online retail increased aggregate welfare from retail activities by 13.4 per cent. Roughly two-thirds of the increase can be attributed to welfare improvements holding fixed market shares, with the remainder due to reallocation. Surprisingly, 8.2 percent of firms actually benefit as they absorb market share from closed stores. Finally, I estimate that the proposed Marketplace Fairness Act would claw back roughly one-third of sales that would otherwise have gone to online retailers between 2007-12.
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Upstream, Downstream: Diffusion and Impacts of the Universal Product Code
January 2017
Working Paper Number:
CES-17-66R
We study the adoption, diffusion, and impacts of the Universal Product Code (UPC) between 1975 and 1992, during the initial years of the barcode system. We find evidence of network effects in the diffusion process. Matched-sample difference-in-difference estimates show that firm size and trademark registrations increase following UPC adoption by manufacturers. Industry-level import penetration also increases with domestic UPC adoption. Our findings suggest that barcodes, scanning, and related technologies helped stimulate variety-enhancing product innovation and encourage the growth of international retail supply chains.
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A Search and Learning Model of Export Dynamics
August 2021
Working Paper Number:
CES-21-17
Exporting abroad is much harder than selling at home, and overcoming hurdles to exporting takes time. Our goal is to identify specific barriers to exporting and to measure their importance. We develop a model of firm-level export dynamics that features costly customer search, network effects in finding buyers, and learning about product appeal. Fitting the model to customs records of U.S. imports of manufactures from Colombia we replicate patterns of exporter maturation. A potentially valuable intangible asset of a firm is its customer base and knowledge of a market. Our model delivers some striking estimates of what such assets are worth. Averaging across active exporters, the loss from total market amnesia (losing its current U.S. customer base along with its accumulated knowledge of product appeal) is US$ 3.4 million, about 34 percent of the value of exporting overall. About half is the loss of future sales to existing customers while the rest is the cost of relearning its appeal in the market and reestablishing visibility as an exporter. Given the importance of search, learning, and visibility, the 5-year response of total export sales to an exchange rate shock exceeds the 1-year response by about 40 percent.
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Home Equity Lending, Credit Constraints and Small Business in the US
October 2020
Working Paper Number:
CES-20-32
We use Texas's constitutional amendment in 1997 that expanded the scope of home equity loans as a source of exogenous variation to estimate the effects of relaxing credit constraints on small businesses. We find, using standard panel data methods and restricted-use microdata from the US Census Bureau, that the Texas amendment increased the use of home equity finance by small businesses, increased new business and job creation and reduced establishment exit and job loss. The effects are larger and significant for businesses with fewer than ten employees.
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Materials Prices and Productivity
June 2012
Working Paper Number:
CES-12-11
There is substantial within-industry variation, even within industries that use and produce homogeneous inputs and outputs, in the prices that plants pay for their material inputs. I explore, using plant-level data from the U.S. Census Bureau, the consequences and sources of this variation in materials prices. For a sample of industries with relatively homogeneous products, the standard deviation of plant-level productivities would be 7% lower if all plants faced the same materials prices. Moreover, plant-level materials prices are both persistent across time and predictive of exit. The contribution of net entry to aggregate productivity growth is smaller for productivity measures that strip out di'erences in materials prices. After documenting these patterns, I discuss three potential sources of materials price variation: geography, di'erences in suppliers. marginal costs, and suppliers. price discriminatory behavior. Together, these variables account for 13% of the dispersion of materials prices. Finally, I demonstrate that plants.marginal costs are correlated with the marginal costs of their intermediate input suppliers.
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