The Production Decisions of Large Competitors: Detecting Cost Advantages and Strategic Behavior in Restaurants

Clarissa Yeap

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: This paper evaluates firm profitability in the highly competitive restaurant industry by comparing variation in firm size and production decisions with variation in market size. In the Census microdata, I find that multi-unit firms operate a greater number of restaurants and larger individual restaurants in larger MSAs. They also increase production intensity by increasing production during operating hours, extending operating hours, increasing the volume of meals and non-meals output. These results are generally consistent with full capacity exploitation in efficient firms, rather than underutilization by firms seeking to limit rivalry through excess capacity or product proliferation.

Pages: 38 pages
Date: 2006-07
New Economics Papers: this item is included in nep-com and nep-tur
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https://www2.census.gov/ces/wp/2006/CES-WP-06-19.pdf First version, 2006 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:06-19

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