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I used to work for one the largest competitors of Walmart in Europe. In France and many European countries to open a supermarket you need approval from a loc

I used to work for one the largest competitors of Walmart in Europe. In France and many European countries to open a supermarket you need approval from a local and national administration. They check if your supermarket will endanger local commerce or existing big box retailers. This is one of the reasons why Costco has delayed it's opening in Paris suburbs. All major european retailers fought (openly or covertly) against the permit and won several times. Fear of the "big American Wolf" aside, it is a well known fact that letting a big box store or a retail park open near a busy city center will cause damages to the city center: some mom and pop shops will move onto the retail park, national clothing chains will do the same. Once almost everything a consumer needs has left for a nearby retail park, the city center economy collapses. Once the city center starts to collapse, it drives even more consumers to the retail park in a cascading effect. I'm on mobile atm so I can only offer anecdotal evidence but I know several economic studies have been made on that subject. A side effect of this regulated model is the prevalence of drive through supermarkets in France. All chains have opened an enormous amount of these. The reason is quite simple: the regulation is enforced for surfaces larger than 400 square metres. Drives have at most 10 square metres open to the public so were free to set shop anywhere. It took a few years to close that loophole...and the meantime carrefour, auchan, le clerc, casino, cora all opened dozens to hundreds of locations.

LyndsySimon 10y ago
I completely agree that large retailers have an impact on the local economy, both positive and negative - and I while I don't agree with them, many jurisdictions have laws and regulations in place to protect the existing economy. Where I was seeking evidence was for the claim that WalMart (1) lowers prices below their cost for the specific purpose of eliminating competition and that they (2) raise prices in compensation after those competitors fold.
- karambahh 10y ago
  I cannot offer evidence to that, but as a rational economic actor looking to maximize its profits, it seems obvious to me that it would be in WalMart best interest to act like this? First, you kill competition, second you jack up the prices once you have established a defacto monopoly (or oligopoly)? See Uber lowering prices last year and "suddenly" rising them this month, now that they are the defacto standard in many cities? Whethever or not laws & regulations should be in place to protect the consumer against that kind of behaviour is another debate :-) Some variation of the prisoner dilemma could be raised as a counter argument to my comment, though...
  - icebraining 10y ago
    The question isn't whether they would like to raise prices, but whether they can. You know the King in the Little Price? He ruled over the whole universe - provided he just made reasonable demands, like ordering the sun to rise at dawn. Likewise, some monopolies are only kept as long as the monopolist doesn't actually abuse it, because as soon as they do, it starts to make sense for competitors to open up. Then the question becomes: if Walmart raised its prices so much, why didn't one of the other large chains move in to the same area? Personally, I started asking anonbanker about it because I find most claims of long-term abuse of monopolies won without State help (Standard Oil being the typical example) to be flimsy at best, so I'm interested in finding good cases. Usually either the monopoly doesn't last very long or it's actually not being abused.

LyndsySimon 10y ago

I completely agree that large retailers have an impact on the local economy, both positive and negative - and I while I don't agree with them, many jurisdictions have laws and regulations in place to protect the existing economy. Where I was seeking evidence was for the claim that WalMart (1) lowers prices below their cost for the specific purpose of eliminating competition and that they (2) raise prices in compensation after those competitors fold.

karambahh 10y ago
I cannot offer evidence to that, but as a rational economic actor looking to maximize its profits, it seems obvious to me that it would be in WalMart best interest to act like this? First, you kill competition, second you jack up the prices once you have established a defacto monopoly (or oligopoly)? See Uber lowering prices last year and "suddenly" rising them this month, now that they are the defacto standard in many cities? Whethever or not laws & regulations should be in place to protect the consumer against that kind of behaviour is another debate :-) Some variation of the prisoner dilemma could be raised as a counter argument to my comment, though...
- icebraining 10y ago
  The question isn't whether they would like to raise prices, but whether they can. You know the King in the Little Price? He ruled over the whole universe - provided he just made reasonable demands, like ordering the sun to rise at dawn. Likewise, some monopolies are only kept as long as the monopolist doesn't actually abuse it, because as soon as they do, it starts to make sense for competitors to open up. Then the question becomes: if Walmart raised its prices so much, why didn't one of the other large chains move in to the same area? Personally, I started asking anonbanker about it because I find most claims of long-term abuse of monopolies won without State help (Standard Oil being the typical example) to be flimsy at best, so I'm interested in finding good cases. Usually either the monopoly doesn't last very long or it's actually not being abused.