Friday, December 5, 2008

Wal-Mart, Competition, and Social Capital

Art Carden, an economist and blogger at Division of Labour has a forthcoming article in Public Choice titled, "Does Wal-Mart Reduce Social Capital?" The abstract (DoL):
Social capital has attracted increasing attention in recent years. We use county level and individual survey data to study how Wal-Mart affects social capital. Estimates using several proxies for social capital—such as club membership, religious activity, time with friends, and other measures—do not support the thesis that “Wal-Mart destroys communities” by reducing social capital.We measure exposure toWal-Mart two ways:Wal-Marts per 10,000 residents and Wal-Marts per 10,000 residents aggregated over the years since 1979 to capture a more cumulative “Wal-Mart Effect.”We find that the coefficients on Wal-Mart’s presence are statistically insignificant in most specifications.
On a related note, All about Cities has a great post about the creative destruction that occurs when Wal-Mart arrives in a new city. Rather than decimating local competitors, some research suggests that firms that adapt do better than they did previously. Some die of course, but that does not automatically mean that consumers are worse off.

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