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Prices and market structure: an empirical analysis of the supermarket industry in Chile

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  • Loreto Lira
  • Magdalena Ugarte
  • Rodrigo Vergara

Abstract

This article investigates empirically the relationship between market structure and consumer prices in the supermarket industry in Chile. A panel of monthly data from 16 cities in the period January 1998–September 2006 is used. We find that, the more concentrated the industry in a city, the higher the prices, while the participation of major national chains in cities tends to lower prices. In terms of magnitude, this latter effect prevails over the former. Moreover, the dominant local chain is found to behave differently depending on whether or not one of the national chains is present in the city. Finally, we find that prices rise when a national chain acquires another chain and both were previously in a city (inmerge) while if only one of the two was present (outmerge), prices fall.

Suggested Citation

  • Loreto Lira & Magdalena Ugarte & Rodrigo Vergara, 2012. "Prices and market structure: an empirical analysis of the supermarket industry in Chile," Applied Economics, Taylor & Francis Journals, vol. 44(36), pages 4731-4744, December.
    • Handle: RePEc:taf:applec:v:44:y:2012:i:36:p:4731-4744
    DOI: 10.1080/00036846.2011.595689
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    Cited by:

    1. Caglayan, Mustafa & Filiztekin, Alpay, 2015. "Price dynamics and market segmentation," Economics Letters, Elsevier, vol. 134(C), pages 94-97.
    2. Koski, Heli, 2018. "How Do Competition Policy and Data Brokers Shape Product Market Competition?," ETLA Working Papers 61, The Research Institute of the Finnish Economy.

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