Handbook on the Economics of Retailing and Distribution
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Handbook on the Economics of Retailing and Distribution

Edited by Emek Basker

This Handbook explores and critically examines current research in economics and marketing science on key economic issues in retailing and distribution. Providing a rich perspective for the discussion of public policy, contributions from several disciplines and continents range from the history of chains and the impact of multinational retailers on international trade patterns; to the US merger policy in the retail context, the rise of the Internet and consumer-to-consumer sales. This state-of-the-art Handbook is an essential reference for students and academics of economics and marketing science and offers outsiders valuable perspectives on operations research, data analytics, geography, and sociology.
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Chapter 8: The role of multinational retailers as foreign direct investment in developing countries

Ran Jing


Multinational retailers have entered developing countries on a large scale. Compared with traditional retailers in the host countries, multinational retailers purchase in larger quantities and have better international networks, which allow them have stronger bargaining power with local suppliers and ultimately pay lower prices for better quality products. Previous studies demonstrate that entry of foreign retailers benefits upstream local suppliers, making them more innovative and productive and increasing their exports. In contrast, foreign retailers have strong market-stealing and pro-competitive effects on local retailers. The total profits of traditional domestic retailers drop owing to the entry of foreign retailers, with both the number of traditional domestic stores and average profits negatively affected. Finally, the entry of foreign retailers effectively reduces the cost of living of local residents, particularly for high-income households.

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