U.S. Department of Agriculture; Agriculture and Food Research Initiative
This research investigates the market-entry of dollar stores as an equilibrium phenomenon and examines whether they represent a market solution to the food desert problem, one that is economically sustainable, nutritionally sound, and robust to recent developments in the food retailing market. We examine dollar-store entry and impact using four complementary approaches, each targeted toward a different dimension of the underlying policy question. We will examine the entry behavior of dollar stores both through a purely empirical lens of econometric causation and through a structural model of dynamic, strategic entry. We will test hypotheses regarding the competitive effects of dollar-store entry on the existing landscape of food retail and consider the dynamic incentives faced by dollar stores given the imperfectly competitive, oligopolistic food retailing industry. We aim to test critical hypotheses regarding the relative prices in markets not served by traditional retailers compared to those that are, focusing on random-weight items. We will examine the impact of dollar-store entry on food insecurity in communities that are served primarily by dollar stores and not traditional retailers. We seek to provide a consistent empirical story of the structure of dollar-store entry, its underlying causes, and its consequences on food availability in host communities. By achieving each of the above objectives, we will arrive at a better understanding of the important role played by dollar stores in the US food-retailing industry in addressing food insecurity.