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Prices, Promotions, and Supermarket Mergers

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Author Info

  • Davis David E.

    (South Dakota State University)

Abstract

Using a unique data set of transaction-level retail food sales, I find that food prices are negatively related to supermarket chains’ shares of total U.S. food sales. The negative relationship suggests that supermarket chains enjoy economies of scale or benefit from an improved post-merger bargaining position. In contrast, the regressions also show an increase in price after a merger, which is independent from changes in observable control variables. Subsequent fractional logit analysis suggests mergers are associated with decreases in the frequency and depth of price-promotions. These latter effects suggest supermarkets enjoy greater unilateral pricing power post-merger, perhaps due to improved brand identity.

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File URL: http://www.degruyter.com/view/j/jafio.2010.8.1/jafio.2010.8.1.1312/jafio.2010.8.1.1312.xml?format=INT
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Bibliographic Info

Article provided by De Gruyter in its journal Journal of Agricultural & Food Industrial Organization.

Volume (Year): 8 (2010)
Issue (Month): 1 (November)
Pages: 1-27

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Handle: RePEc:bpj:bjafio:v:8:y:2010:i:1:n:8

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Web page: http://www.degruyter.com

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Cited by:
  1. Marie-Laure Allain & Claire Chambolle & Stéphane Turolla & Sofia B. Villas-Boas, 2013. "The Impact of Retail Mergers on Food Prices : Evidence from France," Working Papers 2013-18, Centre de Recherche en Economie et Statistique.
  2. Stephen Martin, 2012. "Market Structure and Market Performance," Review of Industrial Organization, Springer, vol. 40(2), pages 87-108, March.

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