Citation

Discussion Paper Details

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Full Details

Title: Retail Chain Expansion: The Early Years of McDonalds in Great Britain

Author(s): Otto Toivanen and Michael Waterson

Publication Date: August 2011

Keyword(s): Cost of entry, diffusion, economies of density, economies of scale, entry and expansion

Programme Area(s): Industrial Organization

Abstract: Understanding the development of chainstores is important given the large GDP share of services and the continuing importance of chains in bringing these services to market. Service chains provide a puzzle because they take a long time to develop even when there are obvious expansion opportunities. We study the spread of McDonalds in Britain. We find cannibalization on the demand side and economies of density both within and between markets on the cost side, and evidence of learning by doing at the firm level. Within-period diseconomies of scale at the firm level help explain the lengthy opening pattern.

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Bibliographic Reference

Toivanen, O and Waterson, M. 2011. 'Retail Chain Expansion: The Early Years of McDonalds in Great Britain'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8534