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Efficiency vs. market power in retailing: Analysis of supermarket chains

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  • Sellers-Rubio, Ricardo
  • Más-Ruiz, Francisco J.

Abstract

The objective of this article is to analyze the relationship between market structure and performance in the Spanish retail sector. As a new contribution, this paper considers a direct measurement of efficiency, which allows us to test different hypotheses explaining profitability in the generic framework of the theories of market power vs. efficiency. The results of the empirical application on a sample of 147 supermarket chains operating in Spain find that the competitive situation that best characterizes this sector is that of the modified efficient structure. Although efficiency does contribute positively to explaining differences in profitability, market share, which would capture the effect of market power, also has a positive effect.

Suggested Citation

  • Sellers-Rubio, Ricardo & Más-Ruiz, Francisco J., 2009. "Efficiency vs. market power in retailing: Analysis of supermarket chains," Journal of Retailing and Consumer Services, Elsevier, vol. 16(1), pages 61-67.
    • Handle: RePEc:eee:joreco:v:16:y:2009:i:1:p:61-67
    DOI: 10.1016/j.jretconser.2008.10.001
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    Cited by:

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    2. Manuel Xavier, José & Ferreira Moutinho, Victor & Carrizo Moreira, António, 2015. "An empirical examination of performance in the clothing retailing industry: A case study," Journal of Retailing and Consumer Services, Elsevier, vol. 25(C), pages 96-105.
    3. Assaf, A. George & Barros, Carlos & Sellers-Rubio, Ricardo, 2011. "Efficiency determinants in retail stores: a Bayesian framework," Omega, Elsevier, vol. 39(3), pages 283-292, June.

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