Research Insights: How Does Increased Competition Impact Prices and Quality in The Retail Sector?
Peer Reviewed
Date issued
December 2019
Journal version
Subject
Behavioral Economics;
Conditional Cash Transfer;
Retail;
Competitive Pricing;
Impact Evaluation
JEL code
I38 - Government Policy • Provision and Effects of Welfare Programs;
C93 - Field Experiments;
O14 - Industrialization • Manufacturing and Service Industries • Choice of Technology;
L81 - Retail and Wholesale Trade • e-Commerce;
L11 - Production, Pricing, and Market Structure • Size Distribution of Firms;
L15 - Information and Product Quality • Standardization and Compatibility
Country
Dominican Republic
Category
Catalogs and Brochures
A conditional cash transfer program in the Dominican Republic offered an opportunity to randomize the entry of 61 firms into 72 markets and study the effects of increased competition on prices and service quality for the beneficiaries of the program. Six months after the intervention, entry into the market led to reductions in prices and an improvement of self-reported service quality among consumers. Prices dropped more in areas where the number of entrants was larger. Competition seems to have driven part of the clientele away from incumbent retailers.
