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The price-concentration relationship in grocery retailing: Retesting Newmark

Author

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  • Chih-ching Yu

    (Department of Business Administration, Dahan Institute of Technology, Hualien, Taiwan)

  • John M. Connor

    (Department of Agricultural Economics, Purdue University, West Lafayette, Indiana)

Abstract

A study by Newmark is one of two price-concentration studies of U.S. grocery retailing that has failed to find a positive relationship. We examined four possible sources of experimental error in this study. The most important source of error was the failure to exclude noncompeting grocery retailers in the construction of the concentration measure. The relationship was also sensitive to controlling for a subgroup of observations from one state, to alternative data sources, and functional form. When these changes were made, concentration was found to be positively associated with the cost of groceries across cities. The relationship was significant despite a small nonrandom sample of cities and unscientifically sampled prices. [Econ Lit citations: L130, L810, L100] © 2002 Wiley Periodicals, Inc.

Suggested Citation

  • Chih-ching Yu & John M. Connor, 2002. "The price-concentration relationship in grocery retailing: Retesting Newmark," Agribusiness, John Wiley & Sons, Ltd., vol. 18(4), pages 413-426.
    • Handle: RePEc:wly:agribz:v:18:y:2002:i:4:p:413-426
    DOI: 10.1002/agr.10028
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    References listed on IDEAS

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    Cited by:

    1. Connor, John M., 2003. "The Changing Structure Of Global Food Markets: Dimensions, Effects, And Policy Implications," Staff Papers 28675, Purdue University, Department of Agricultural Economics.
    2. Johan F.M. Swinnen & Anneleen Vandeplas, 2010. "Market power and rents in global supply chains," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 109-120, November.
    3. Connor, John M., 1999. "Evolving Research on Price Competition in the Grocery Retailing Industry: An Appraisal," Agricultural and Resource Economics Review, Cambridge University Press, vol. 28(2), pages 119-127, October.
    4. Seres, Antal & Juhász, Anikó & Stauder, Márta, 2005. "A kereskedelmi koncentráció hatásának egyes kérdései [Some questions about the effect of trade concentration]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 774-794.
    5. Volpe, Richard J., III & Lavoie, Nathalie, 2006. "The Effect of Wal-Mart Supercenters on Grocery Prices in New England," Working Paper Series 14515, University of Massachusetts, Amherst, Department of Resource Economics.
    6. Ronald W. Cotterill, 2002. "An Antitrust Economic Analysis of Stop & Shop's Proposed Acquisition of the Big V Shop Rite Supermarket Chain," Food Marketing Policy Center Research Reports 063, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    7. Richard J. Volpe & Nathalie Lavoie, 2008. "The Effect of Wal-Mart Supercenters on Grocery Prices in New England," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(1), pages 4-26.
    8. Volpe, Richard & Saitone, Tina & Sexton, Richard, 2014. "Cost Containment in the WIC Program: Vendor Peer Groups and Reimbursement Rates," Economic Research Report 183224, United States Department of Agriculture, Economic Research Service.
    9. Cai, Xiaowei & Volpe, Richard J. & Schroeter, Christiane & Mancino, Lisa, 2017. "Food Retail Market Structure and Produce Purchases in the U.S," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258471, Agricultural and Applied Economics Association.
    10. Richard Volpe, 2013. "Promotional Competition Between Supermarket Chains," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(1), pages 45-61, February.
    11. Volpe, Richard & Okrent, Abigail, 2012. "Assessing the Healthfulness of Consumers' Grocery Purchases," Economic Information Bulletin 262129, United States Department of Agriculture, Economic Research Service.
    12. Volpe, Richard, 2011. "The Relationship Between National Brand and Private Label Food Products: Prices, Promotions, Recessions, and Recoveries," Economic Research Report 262234, United States Department of Agriculture, Economic Research Service.
    13. Xiaowei Cai & Richard Volpe & Christiane Schroeter & Lisa Mancino, 2018. "Food retail market structure and produce purchases in the United States," Agribusiness, John Wiley & Sons, Ltd., vol. 34(4), pages 756-770, October.
    14. Volpe, Richard J., III & Lavoie, Nathalie, 2005. "The Effect of Wal-Mart Supercenters on Grocery Prices in New England," 2005 Annual meeting, July 24-27, Providence, RI 19188, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Romero, Jaime & Cruz-Roche, Ignacio & Charron, Jean-Philippe, 2020. "The myth of price convergence under economic integration: A proposed explanation for the difference in food prices across European countries," European Management Journal, Elsevier, vol. 38(2), pages 267-276.

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