IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Concentration Of Ownership In Food Retailing: A Review Of The Evidence About Consumer Impact

Listed author(s):
  • Kinsey, Jean D.
Registered author(s):

    Increased concentration in ownership of retail and wholesale food companies in the United States naturally leads to the question "How does concentration of ownership affect consumers?" Does it lead to higher or lower food prices, better or worse service, more or less choice between stores and among products, and more or less employment and earning opportunities in the food sector? Since the early 1980's the percent of total sales captured by the top four supermarket chains have gone from 18 to 22 percent; food prices decreased, food expenditures relative to income and employment and earnings have all fallen modestly. Choice and service are harder to measure. Competition at the local level appears to be alive and well since numerous types of food retailers offer attractive substitutes for food purchased in a grocery store. The relationship between concentration, prices and profits has been studied and examined for several decades using various economic and business theories and several sources of data. These studies speak to the overall behavior and performance of the industry and provide a perspective on the consolidation and shifts in power that appear to be taking place. The results of many of these studies are summarized in this paper. Findings focus on two major questions: 1) Does the concentration of retail food firms in local markets increase food prices and firms' profits? 2) Has the retail sector become relatively more profitable and, thus, more powerful than the manufacturing sector? The results are mixed, especially with regard to price. Concentration tends to be associated with both increased and decreased prices. Recent work indicates prices tend to increase in dry grocery items, but not in fresh and chilled foods. And, concentration at the wholesale level may lower food prices. Profits of the parent company generally rise with concentration, but the reason is unclear. Most studies conclude it is due to lower costs made possible by economies of scale in procurement or vertical coordination with suppliers and better use of information technology. There was no evidence that retailers' profits are increasing faster than food manufacturers' profits.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Paper provided by University of Minnesota, The Food Industry Center in its series Working Papers with number 14329.

    in new window

    Date of creation: 1998
    Handle: RePEc:ags:umrfwp:14329
    Contact details of provider: Postal:
    317 Classroom Office Building, 1994 Buford Avenue, St. Paul, MN 55108-6040

    Phone: 612-625-7019
    Fax: 612-625-2729
    Web page:

    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    in new window

    1. 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.
    2. John M. Connor, 1996. "Did the Competitive Regime Switch in the 1980s?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1192-1197.
    3. Viaene, Jacques & Gellynck, Xavier, 1995. "Structure, Conduct and Performance of the European Food Sector," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 22(3), pages 282-295.
    4. Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009 Elsevier.
    5. Binkley, James K. & Connor, John M., 1996. "Market Competition And Metropolitan-Area Grocery Prices," Working Papers 25988, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    6. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
    7. Chevalier, Judith A, 1995. "Capital Structure and Product-Market Competition: Empirical Evidence from the Supermarket Industry," American Economic Review, American Economic Association, vol. 85(3), pages 415-435, June.
    8. 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.
    9. Elitzak, Howard, 1999. "Food Cost Review, 1950-97," Agricultural Economics Reports 34053, United States Department of Agriculture, Economic Research Service.
    10. Newmark, Craig M., 1990. "A new test of the price-concentration relationship in grocery retailing," Economics Letters, Elsevier, vol. 33(4), pages 369-373, August.
    11. Paul R. Messinger & Chakravarthi Narasimhan, 1995. "Has Power Shifted in the Grocery Channel?," Marketing Science, INFORMS, vol. 14(2), pages 189-223.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ags:umrfwp:14329. 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: (AgEcon Search)

    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.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.