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The Effect of Mergers on Variety in Grocery Retailing

Author

Listed:
  • Duso, Tomaso
  • Argentesi, Elena
  • Buccirossi, Paolo
  • Cervone, Roberto
  • Marrazzo, Alessia

Abstract

We study the effect of a merger between two Dutch supermarket chains to assess its effect on the depth as well as composition of assortment. We adopt a difference-in-differences strategy that exploits local variation in the merger's effects, controlling for selection on observables through a matching procedure when defining our control group. We show that the merger led the merging parties to reposition their assortment to avoid cannibalization in the areas where they directly competed before the merger. While the low-variety target's stores reduced the depth of their assortment when in direct competition with the acquirer, the latter increased their assortment. This suggests that variety is a strategic variable in retail chains' response to changes in local competition.

Suggested Citation

  • Duso, Tomaso & Argentesi, Elena & Buccirossi, Paolo & Cervone, Roberto & Marrazzo, Alessia, 2021. "The Effect of Mergers on Variety in Grocery Retailing," CEPR Discussion Papers 16230, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16230
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    Cited by:

    1. is not listed on IDEAS
    2. Genakos, C. & Pagliero, M. & Sabatino, L. & Valletti, T., 2025. "Cultural Exception? The Impact of Price Regulation on Prices and Variety in the Market for Books," Cambridge Working Papers in Economics 2514, Faculty of Economics, University of Cambridge.
    3. Dimitrakopoulou, Lydia & Genakos, Christos & Kampouris, Themistoklis & Papadokonstantaki, Stella, 2024. "VAT pass-through and competition: Evidence from the Greek islands," International Journal of Industrial Organization, Elsevier, vol. 97(C).

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    Keywords

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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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