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Market Consolidation and Pricing Developments in Grocery Retailing: A Case Study

In: THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION

Author

Listed:
  • Ratula Chakraborty
  • Paul W. Dobson
  • Jonathan S. Seaton
  • Michael Waterson

Abstract

When large retailers merge, there is a concern that a sudden and marked increase in concentration will alter the intensity and nature of price competition to the detriment of consumers. This chapter considers just such a situation in regard to UK grocery retailing, which has witnessed steadily increasing concentration over recent years, advanced by a series of mergers. Specifically, we examine the nature of price competition amongst the major “one-stop-shop” retail chains before, during, and after the Safeway/Morrison merger in March 2004.We find the merger offered consumers an immediate windfall benefit — with average prices falling straight after the merger — and more intriguingly appears to have led to (or at least is associated with) a marked change in the character of price competition in the market.

Suggested Citation

  • Ratula Chakraborty & Paul W. Dobson & Jonathan S. Seaton & Michael Waterson, 2014. "Market Consolidation and Pricing Developments in Grocery Retailing: A Case Study," World Scientific Book Chapters, in: Martin Peitz & Yossi Spiegel (ed.), THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION, chapter 1, pages 3-29, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814616362_0001
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    Citations

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    Cited by:

    1. Hao Lan & Tim Lloyd & Wyn Morgan & Paul W. Dobson, 2022. "Are food price promotions predictable? The hazard function of supermarket discounts," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 64-85, February.
    2. Sang-Hyun Kim & Hao Lan & Paul W Dobson, 2021. "Identifying price-leadership structures in oligopoly," Oxford Economic Papers, Oxford University Press, vol. 73(1), pages 350-370.
    3. Chakraborty, Ratula & Dobson, Paul W. & Seaton, Jonathan S. & Waterson, Michael, 2015. "Pricing in inflationary times: The penny drops," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 71-86.
    4. Dennis Rickert & Jan Philip Schain & Joel Stiebale, 2021. "Local Market Structure and Consumer Prices: Evidence from a Retail Merger," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 692-729, September.
    5. Argentesi, Elena & Buccirossi, Paolo & Cervone, Roberto & Duso, Tomaso & Marrazzo, Alessia, 2016. "The effect of retail mergers on prices and variety: An ex-post evaluation," DICE Discussion Papers 225, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    6. Ratula Chakraborty, 2018. "Do Retailers Manipulate Prices to Favour Private Label over Brands?," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2018-02, Centre for Competition Policy, University of East Anglia, Norwich, UK..

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