Geographic Market Definition in Swiss Grocery Retailing: A Non-Parametric Approach

This paper develops a non-parametric approach to empirically determine geographic market size. I provide estimates of local business-stealing effects across distance by studying the impact of store entry on competitors in an increasing range to the site of entry. Entropy balancing is employed to control for systematic differences across local markets. I estimate that markets for Swiss grocery retailing stores are highly localized in a tight four kilometer radius. I further document evidence that the impact weakens with increasing distance and that smaller retailers compete in a more narrow market of only two kilometers in size.