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DOES WAL-MART SELL INFERIOR GOODS?

Authors

  • EMEK BASKER

    1. Basker: Professor, University of Missouri, Columbia, MO, USA. Phone 573-882-6023; Fax 573-882-2697, E-mail emek@missouri.edu
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    • 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.

Errata

This article is corrected by:

  1. Errata: Corrigendum Volume 51, Issue 3, 1913, Article first published online: 6 May 2013

Abstract

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)

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