Assessing the Effect of Wal-Mart in Rural Utah Areas

• Main Author: Nelson, Angela
• Format: Others
• Published: BYU ScholarsArchive 2011
• Subjects: mixed models; sales tax base; Statistics and Probability
• Online Access: https://scholarsarchive.byu.edu/etd/2779; https://scholarsarchive.byu.edu/cgi/viewcontent.cgi?article=3778&context=etd

Walmart and other “big box” stores seek to expand in rural markets, possibly due to cheap land and lack of zoning laws. In August 2000, Walmart opened a store in Ephraim, a small rural town in central Utah. It is of interest to understand how Walmart's entrance into the local market changes the sales tax revenue base for Ephraim and for the surrounding municipalities. It is thought that small “Mom and Pop” stores go out of business because they cannot compete with Walmart's prices, leading to a decrease in variety, selection, convenience, and most importantly, sales tax revenue base in areas surrounding Ephraim. This shift in sales tax base is assessed using mixed models. It is found that the entrance of Walmart in Sanpete County has a significant change on sales tax revenue, specifically in the retail industry. A method of calculating the loss for each city is discussed and a sensitivity analysis is performed. This project also documents what has been done to assemble the data set. In addition to discussing the assumptions made to clean the data, explanations of area and industry definition exploration are explained and defended.