I thank Ricard Gil, Mark Lewis, Zack Miller, Jeff Milyo, Peter Mueser, and two anonymous referees for helpful comments and conversations. All errors are my own.
DOES WAL-MART SELL INFERIOR GOODS?
Article first published online: 7 DEC 2009
© 2009 Western Economic Association International
Volume 49, Issue 4, pages 973–981, October 2011
How to Cite
BASKER, E. (2011), DOES WAL-MART SELL INFERIOR GOODS?. Economic Inquiry, 49: 973–981. doi: 10.1111/j.1465-7295.2009.00195.x
- Issue published online: 7 DEC 2009
- Article first published online: 7 DEC 2009
- Online Early publication December 7, 2009
Vol. 51, Issue 3, 1913, Article first published online: 6 MAY 2013
I estimate the aggregate income elasticity of Wal-Mart's and Target's revenues using quarterly data for 1997–2006. I find that Wal-Mart's revenues increase during bad times, whereas Target's revenues decrease, consistent with Wal-Mart selling “inferior goods” in the technical sense of the term. An upper bound on the aggregate income elasticity of demand for Wal-Mart's wares is −0.5. (JEL L81, D12)