Competition Effects of Supermarket Services
AbstractThis article investigates the competition effects of supermarket food and non-food services using fluid milk as a case study. A simultaneous equation model for services and price competition is estimated with scanner data from 16 supermarket chains operating in six U.S. cities. Empirical results show that a greater scope of services results in higher retail cost, greater supermarket chain-level demand but lower price elasticity, and enhanced market power, all leading to higher milk prices and quantity of milk sold. However, unlike previous research, we conclude that increases in cost rather than market power explain most of the ensuing price increases.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy in its series Food Marketing Policy Center Research Reports with number 094.
Length: 35 pages
Date of creation: Nov 2007
Date of revision:
retailing; service; pricing; milk; market power; competition;
Other versions of this item:
- Bonanno, Alessandro & Lopez, Rigoberto, 2007. "Competition Effects of Supermarket Services," Research Reports 149176, University of Connecticut, Food Marketing Policy Center.
- Bonanno, Alessandro & Lopez, Rigoberto A., 2007. "Competition Effects of Supermarket Services," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9833, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
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