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Power imbalances in French food retailing: Evidence from a production function approach to estimate market power

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  • Hirsch, Stefan
  • Koppenberg, Maximilian

Abstract

We analyze whether an association of firms to the dominant oligopoly of food retail groups is related to higher oligopoly market power. We apply a production function approach for the estimation of firm-level markups to a sample of 3,366 French food retailers over the period 2006–2014. The results suggest the presence of power imbalances between firms of the dominant oligopoly and fringe firms. We also detect a positive connection between markups and profitability pointing to a reduction in consumer welfare due to retailers’ oligopoly market power.

Suggested Citation

  • Hirsch, Stefan & Koppenberg, Maximilian, 2020. "Power imbalances in French food retailing: Evidence from a production function approach to estimate market power," Economics Letters, Elsevier, vol. 194(C).
    • Handle: RePEc:eee:ecolet:v:194:y:2020:i:c:s0165176520302433
    DOI: 10.1016/j.econlet.2020.109387
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    Cited by:

    1. Ensar Yılmaz & Zeynep Kaplan, 2022. "Heterogeneity of market power: firm-level evidence," Economic Change and Restructuring, Springer, vol. 55(2), pages 1207-1228, May.
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    3. Maximilian Koppenberg & Stefan Hirsch, 2022. "Output market power and firm characteristics in dairy processing: Evidence from three EU countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(2), pages 490-517, June.
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    5. Maximilian Koppenberg, 2023. "Markups, organic agriculture and downstream concentration at the example of European dairy farmers," Agricultural Economics, International Association of Agricultural Economists, vol. 54(2), pages 161-178, March.

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    More about this item

    Keywords

    Firm-level markups; Power imbalances; Production function approach; French food retailing;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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