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Chain-store Pricing and the Structure of Retail Markets

Listed author(s):
  • Matt Olczak


    (Centre for Competition Policy, University of East Anglia)

This paper investigates competition between chain-stores and independents in the UK opticians' industry, using the relationship between the number of outlets present in a local market and the market size. Chain-stores are shown to have a significant effect on local market competition. In addition, the empirical approach is extended to allow inferences on the nature and extent of product differentiation. The results are broadly consistent with a model of vertical product differentiation in which chain-stores adopt national pricing strategies. The evidence suggests that the nature of competition between independent retailers depends on whether a chain-store is present.

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Paper provided by Centre for Competition Policy, University of East Anglia in its series Working Papers with number 06-7.

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Length: 36 pages
Date of creation: Apr 2006
Handle: RePEc:ccp:wpaper:wp06-07
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