This article examines changes in supermarket prices in local markets following supermarket leveraged buyouts (LBOs). The author finds that prices rise following LBOs in local markets in which the LBO firm's rivals are also highly leveraged and that LBO firms have higher prices than their less leveraged rivals, suggesting that LBOs create incentives to raise prices. However she also finds that prices fall following LBOs in local markets in which rival firms have low leverage and are concentrated. These price drops are associated with LBO firms exiting the local market suggesting that rivals attempt to 'prey' on LBO chains. Copyright 1995 by American Finance Association.
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Article provided by American Finance Association in its journal Journal of Finance.
Volume (Year): 50 (1995) Issue (Month): 4 (September) Pages: 1095-1112 Download reference. The following formats are available: HTML
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