IDEAS home Printed from https://ideas.repec.org/a/emc/ecomex/v21y2012i2p297-349.html
   My bibliography  Save this article

Supermarkets: Price Competition

Author

Listed:
  • Alejandro Castañeda Sabido

    () (Profesor-investigador, Centro de Estudios Económicos, El Colegio de México, y profesor-investigador visitante, CIDE. México, D.F. Mexico)

Abstract

By using a sample of 108 products across 118 supermarket stores, we study price competition among supermarkets. The study uses a modified version of the Staples dispute to define the estimation equations. We also include other statistical models to analyze price competition among supermarkets. The study does include three ways of measuring the relevant market. First, we define a geographic market in which all supermarkets included in a 5 kilometer radius are competing with the pivot store (the store that we have information on prices). This radius is valid for the three largest cities in Mexico (Mexico, Guadalajara and Monterrey). For the rest of the cities we consider a radius of 8 km. In a second approach we define two circles for all pivot stores in the country. In a first circle we include all stores within a 5 km distance from the pivot store. In a second circle we include all stores located between 5 and 8 kilometers from the pivot store. In a third approach we consider the municipality as the geographical market. We find that supermarket chains have different pricing policies that vary according to the number and identity of rivals. We also find that Walmart does not compete strongly in prices. In fact, in those markets in which the number of Walmart stores increases, the rivals tend to increase prices. We also find that stores fix lower prices whenever there are more chains in the relevant market.

Suggested Citation

  • Alejandro Castañeda Sabido, 2012. "Supermarkets: Price Competition," Economía Mexicana NUEVA ÉPOCA, , vol. 0(2), pages 297-349, July-Dece.
  • Handle: RePEc:emc:ecomex:v:21:y:2012:i:2:p:297-349
    as

    Download full text from publisher

    File URL: http://www.economiamexicana.cide.edu/num_anteriores/XXI-2/04.EM_AlejandroCastanedaSabido(297-349).pdf
    Download Restriction: no

    More about this item

    Keywords

    competition; prices; supermarkets.;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:emc:ecomex:v:21:y:2012:i:2:p:297-349. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ricardo Tiscareño). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.