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Chapter 42 Walmart: Always Low Prices (and Low Wages) - Always

Chapter 42 Walmart: Always Low Prices (and Low Wages) - Always. Chapter Outline. The Market Form Who Is Affected?. The Market Form. Small Towns Oligopoly or Monopoly Everywhere else Monopolistic Competition Competitors Supers (Wal-Mart, Target, K-Mart) National Chains (Kroger, Safeway)

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Chapter 42 Walmart: Always Low Prices (and Low Wages) - Always

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  1. Chapter 42Walmart: Always Low Prices (and Low Wages) - Always

  2. Chapter Outline • The Market Form • Who Is Affected?

  3. The Market Form • Small Towns • Oligopoly or Monopoly • Everywhere else • Monopolistic Competition • Competitors • Supers (Wal-Mart, Target, K-Mart) • National Chains (Kroger, Safeway) • Regional Chains (Wegmans, Winn-Dixie, Publix) • Locals • IGA affiliated • Independent

  4. Top Ten Grocery Store Chains

  5. Store Locations

  6. Monopsony Concerns • Walmart is the biggest wholesale buyer for many companies’ products. • Walmart (often) dictates the price will is willing to pay. • This forces companies to • outsource production. • cut costs (including wages and benefits)

  7. Who is Affected?Consumers • For consumers who switch to Walmart the gain is b/w $15 million and $33 million per store • Walmart’s prices are 15-22% lower than national averages. • An average Walmart sells $100-$150 million in goods. • For consumers who like their old store, but it closes. • Consumers “reveal” their preferences by paying higher prices at smaller IGA stores. • These consumers are worse off if the store closes. • Nearly all economists consider this a net win for consumers.

  8. Who is Affected?Workers • Walmart’s pay and benefit package is $5-$10 lower than their competitors. • Competitors are • unionized • have retirees • New Walmarts hire b/w 450 and 500 workers (375-400 FTE) • Many/most of the new Walmart jobs are displaced elsewhere. • Productivity rises.

  9. Who is Affected?Taxpayers • Most (b/w 70% and 80%) of a new Walmart’s sales displace sales elsewhere in the community. • Sales taxes would not necessary be affected because • Food is rarely taxed • The increase in sales is mostly from people in the state (or taxing district.)

  10. Who is Affected?Other Businesses • Hurt • Competitors that try to “out Walmart Walmart” • Unaffected • Competitors that sell goods Walmart • Helped • Complementary stores and restaurants that surround the Walmart

  11. Who is Affected?Community • Sociologists have noted that Walmart damages the non-economic fabric of communities. • Displaced business owners tend to be • Church leaders • School Board members • Community leaders

  12. What is the Net? • Winners • Most Consumers • Complementary Businesses • Losers • Workers • Competing Businesses • Economists generally view the net as positive

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