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Antitrust analysis of supermarkets: global concerns playing out in local markets

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  • Ronald W. Cotterill

Abstract

This paper reviews the basic components of antitrust analysis for the supermarket industry, including definition of product and geographic markets and the measurement of market power. The analysis of prices and profits in a market structure context remains important, especially in countries such as Australia with very high supermarket concentration. Firm and brand level New Empirical Industrial Organisation models of demand and oligopoly pricing also provide insights for evaluating antitrust claims. Recent research on vertical pricing games and price transmission expand the analysis to market channel pricing issues, including coalescing power by supermarkets and food manufacturers. The issues and approaches explained in this paper are relevant for policy-orientated research on supermarkets worldwide, including Australia. Copyright Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd 2006.

Suggested Citation

  • Ronald W. Cotterill, 2006. "Antitrust analysis of supermarkets: global concerns playing out in local markets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(1), pages 17-32, March.
  • Handle: RePEc:bla:ajarec:v:50:y:2006:i:1:p:17-32
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    References listed on IDEAS

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    1. Cotterill, Ronald W & Putsis, William P, Jr & Dhar, Ravi, 2000. "Assessing the Competitive Interaction between Private Labels and National Brands," The Journal of Business, University of Chicago Press, vol. 73(1), pages 109-137, January.
    2. Cotterill, Ronald W & Haller, Lawrence E, 1992. "Barrier and Queue Effects: A Study of Leading U.S. Supermarket Chain Entry Patterns," Journal of Industrial Economics, Wiley Blackwell, vol. 40(4), pages 427-440, December.
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    4. Sofia Berto Villas-Boas, 2007. "Vertical Relationships between Manufacturers and Retailers: Inference with Limited Data," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 625-652.
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    7. Bontemps Christophe & Orozco Valerie & Réquillart Vincent & Trevisiol Audrey, 2005. "Price Effects of Private Label Development," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-18, February.
    8. Charles Hyde & Jeffrey Perloff, 1998. "Multimarket market power estimation: the Australian retail meat sector," Applied Economics, Taylor & Francis Journals, vol. 30(9), pages 1169-1176.
    9. Sexton Richard J. & Zhang Mingxia & Chalfant James A., 2005. "Grocery Retailer Behavior in Perishable Fresh Produce Procurement," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-23, February.
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    12. Dae-Wook Kim & Christopher R. Knittel, 2004. "Biases in Static Oligopoly Models? Evidence from the California Electricity Market," NBER Working Papers 10895, National Bureau of Economic Research, Inc.
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    14. Dobson, Paul W & Waterson, Michael, 1997. "Countervailing Power and Consumer Prices," Economic Journal, Royal Economic Society, vol. 107(441), pages 418-430, March.
    15. Ronald W. Cotterill & Tirtha Pratim Dhar, 2003. "Oligopoly Pricing with Differentiated Products: The Boston Fluid Milk Market Channel," Food Marketing Policy Center Research Reports 074, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    16. Cotterill, Ronald W, 1986. "Market Power in the Retail Food Industry: Evidence from Vermont," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 379-386, August.
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    Cited by:

    1. Sofia Berto Villas-Boas, 2007. "Using Retail Data For Upstream Merger Analysis," Journal of Competition Law and Economics, Oxford University Press, vol. 3(4), pages 689-715.
    2. Dieter Pennerstorfer & Franz Sinabell, 2013. "Spatial Price Differentiation and Regional Market Power. The Case of Food-Retailing in Austria," WIFO Working Papers 458, WIFO.
    3. Minten, Bart, 2007. "The food retail revolution in poor countries: Is it coming or is it over? Evidence from Madagascar," IFPRI discussion papers 719, International Food Policy Research Institute (IFPRI).
    4. Round, David K., 2006. "The power of two: squaring off with Australia’s large supermarket chains," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(1), March.
    5. Sven Anders, 2008. "Imperfect Competition in German Food Retailing: Evidence from State Level Data," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(4), pages 441-454, December.
    6. Villas-Boas, Sofia B, 2007. "Using Retail Scanner Data for Upstream Merger Analysis: Counterfactual Experiments in the Retail Coffee Market," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5cn9d0rk, Department of Agricultural & Resource Economics, UC Berkeley.

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