Another Walmart effect

. . . [A] new Walmart store actually increases housing prices by between 2 and 3 percent for houses located within 0.5 miles of the store and by 1 to 2 percent for houses located between 0.5 and 1 mile.

From Pope and Pope (May 2012).  

Wal-Mart and institutions

Stephanie Clifford writes in the NYT: 

Wal-Mart’s stock fell almost 5 percent on Monday . . .

Can the current events improve institutions in Mexico? Multinational corporations could be a channel for institutional change. 

CBS news reports:

Claims that U.S. retail giant Wal-Mart used payoffs to speed zoning and other permits in its break-neck Mexican expansion is sparking soul-searching in Mexico . . .

Wal-mart and farmer economies in Nicaragua

This is a 2010 paper that looks at the effects of big retail, sucha as Wal-mart, on small farmer economies in Nicaragua - quite interesting:

In Nicaragua and elsewhere in Central America, small-scale farmers are weighing the risks of entering into contracts with supermarket chains. We use unique data on negotiated prices from Nicaraguan farm cooperatives supplying supermarkets to study the impact of supply agreements on producers’ mean output prices and price stability. We find that prices paid by the domestic retail chain approximate the traditional market in mean and variance. In contrast, we find that mean prices paid by Wal-mart are significantly lower than the traditional market but that Wal-Mart systematically reduces price volatility compared with the traditional market. We find some evidence, however, that farmers may be paying too much for this contractual insurance against price variation.

I have reported on other Wal-mart effects before. One should see these effects through "general equilibrium," meaning to take into account all the possible effects in all the different sectors through time - easier to say than it is to do.  

Another Wal-Mart effect

According to this article published in the latest number (August 2011) of the QJE, one of the main effects is that more Wallmart stores povides strong incentives for other stores to invest in product quality. The evidence is from the US but is relevant for developing countries where Wal-Mart now has strong presence. 

Abstract: This paper analyzes the effect of competition on a supermarket firm’s incentive to provide product quality. In the supermarket industry, product availability is an important measure of quality. Using U.S. consumer price index microdata to track inventory shortfalls, I find that stores facing more intense competition have fewer shortfalls. Competition from Wal-Mart – the most significant shock to industry market structure in half a century – decreased shortfalls by up to 24 percent. The risk of customers switching stores appears to provide strong incentives for investments in product quality.

The evidence is quite compelling. Great paper! [the chart was taken from the working paper (2009)].