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Retail sector concentration and price dynamics in the euro area: a regional analysis

  • Emanuela Ciapanna

    ()

    (Banca d'Italia)

  • Concetta Rondinelli

    ()

    (Banca d'Italia)

We conduct a regional analysis of the relationship between market concentration and price dynamics in the grocery retail sector, focusing on a sample of five categories of goods belonging to the 12 COICOP aggregation and on a panel of countries that includes Germany, Spain, Finland, Italy, Austria and Portugal. Using a unique census-type dataset on retailers, we construct Herfindahl-Hirschman indices of concentration at the buying group, parent company and individual shop level for a sample of 118,540 large grocery stores and we study the association between these measures and regional price changes. Our results point to a positive association between retail market concentration and price growth in food and beverages, alcohol and tobacco and miscellaneous goods in the time span 2003-2010 at the buying, parental group and store level for the pooled sample of countries. The relation reverses sign for clothing and footwear and household equipment. This evidence is robust to different specifications of concentration indices.

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File URL: http://www.bancaditalia.it/pubblicazioni/qef/2011-0107/QEF_107.pdf
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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Questioni di Economia e Finanza (Occasional Papers) with number 107.

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Date of creation: Oct 2011
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Handle: RePEc:bdi:opques:qef_107_11
Contact details of provider: Postal: Via Nazionale, 91 - 00184 Roma
Web page: http://www.bancaditalia.it
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  1. Cotterill, Ronald, 2007. "Market Definition and Market Power in the British Supermarket Industry," Research Reports 149201, University of Connecticut, Food Marketing Policy Center.
  2. Benabou, R., 1991. "Inflation and Markups: Theories and Evidence from the Retail Trade Sector," Working papers 587, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Barros, Pedro Pita & Brito, Duarte & de Lucena, Diogo, 2006. "Mergers in the food retailing sector: An empirical investigation," European Economic Review, Elsevier, vol. 50(2), pages 447-468, February.
  4. Dobson, Paul W & Waterson, Michael, 1997. "Countervailing Power and Consumer Prices," Economic Journal, Royal Economic Society, vol. 107(441), pages 418-30, March.
  5. Chen, Zhiqi, 2003. " Dominant Retailers and the Countervailing-Power Hypothesis," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 612-25, Winter.
  6. Paul Dobson & Michael Waterson, 1999. "Retailer power: recent developments and policy implications," Economic Policy, CEPR;CES;MSH, vol. 14(28), pages 133-164, 04.
  7. Przybyla, Marcin & Roma, Moreno, 2005. "Does product market competition reduce inflation? Evidence from EU countries and sectors," Working Paper Series 0453, European Central Bank.
  8. Sofia Berto Villas-Boas, 2009. "An empirical investigation of the welfare effects of banning wholesale price discrimination," RAND Journal of Economics, RAND Corporation, vol. 40(1), pages 20-46.
  9. von Ungern-Sternberg, Thomas, 1996. "Countervailing power revisited," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 507-519, June.
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