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Food pricing, competition, and the emerging supercenter format

  • Kyle W. Stiegert

    (Food System Research Group, University of Wisconsin, Madison)

  • Todd Sharkey

    (Associated Bank, Red Wing, MN)

Much previous research has examined the role of concentration, level of service, and entry barriers on U.S. food retailing profits and prices. Despite the rapid advancement of food supercenters, public policy research evaluating their price impacts remains quite limited. The purpose this study is to examine the price impacts from supercenter entry, growing supercenter market share, and supermarket consolidation from 1993-2003. Findings were that both the market share of supercenter food sales and the marginal impact of supercenter entry did not have a significant impact on food prices in the metropolitan statistical areas (MSAs) analyzed. These are important findings in light of claims that supercenters entry causes a procompetitive effect. Futhermore, changes in market concentration was significantly and positively related to price changes. Therefore, it appears consolidation led to higher prices and any merger-related cost gains during this period were not passed on to consumers. [EconLit Classifications: D400, L130, L660]. © 2007 Wiley Periodicals, Inc. Agribusiness 23: 295-312, 2007.

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Article provided by John Wiley & Sons, Ltd. in its journal Agribusiness.

Volume (Year): 23 (2007)
Issue (Month): 3 ()
Pages: 295-312

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Handle: RePEc:wly:agribz:v:23:y:2007:i:3:p:295-312
Contact details of provider: Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297

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  1. 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 379-86, August.
  2. Breusch, T S & Pagan, A R, 1980. "The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 239-53, January.
  3. Bhargava, A & Franzini, L & Narendranathan, W, 1982. "Serial Correlation and the Fixed Effects Model," Review of Economic Studies, Wiley Blackwell, vol. 49(4), pages 533-49, October.
  4. Bruce Marion, 1998. "Competition in Grocery Retailing: The Impact of a New Strategic Group on BLS Price Increases," Review of Industrial Organization, Springer, vol. 13(4), pages 381-399, August.
  5. Hall, Lana & Schmitz, Andrew & Cothern, James, 1979. "Beef Wholesale-Retail Marketing Margins and Concentration," Economica, London School of Economics and Political Science, vol. 46(183), pages 295-300, August.
  6. Lamm, R McFall, 1981. "Prices and Concentration in the Food Retailing Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 30(1), pages 67-78, September.
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