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Spatial competition in the French supermarket industry

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  • Stéphane Turolla

Abstract

This paper challenges the conventional wisdom on the competitive grocery retail sector in France. To that end, I develop a structural model of spatial competition that accounts for (i) market geography on consumers' preferences, and (ii) differences in their shopping list. The demand estimates are used to recover stores' price-cost margin under alternative pricing strategies. I select the best pricing model by applying non-nested tests and show that retailers noticeably distort their offer in highly concentrated markets. Finally, I perform counterfactual experiments to quantify the expected gain of an additional store on consumer welfare and retail prices.

Suggested Citation

  • Stéphane Turolla, 2012. "Spatial competition in the French supermarket industry," Working Papers SMART 12-01, INRAE UMR SMART.
    • Handle: RePEc:rae:wpaper:201201
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    File URL: http://www6.rennes.inra.fr/smart/Media/Working-papers/WP12-01
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    References listed on IDEAS

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    Cited by:

    1. Timothy J. Richards & Gordon J. Klein & Celine Bonnet & Zohra Bouamra-Mechemache, 2020. "Strategic Obfuscation and Retail Pricing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(4), pages 859-889, December.
    2. Marie-Laure Allain & Claire Chambolle & Stéphane Turolla & Sofia B. Villas-Boas, 2017. "Retail Mergers and Food Prices: Evidence from France," Journal of Industrial Economics, Wiley Blackwell, vol. 65(3), pages 469-509, September.
    3. Thomas, Alban & Lamine, Claire & Allès, Benjamin & Chiffoleau, Yuna & Doré, Antoine & Dubuisson-Quellier, Sophie & Hannachi, Mourad, 2020. "The key roles of economic and social organization and producer and consumer behaviour towards a health-agriculture-food-environment nexus: recent advances and future prospects," Review of Agricultural, Food and Environmental Studies, Institut National de la Recherche Agronomique (INRA), vol. 101(1), August.
    4. Marie-Laure Allain & Claire Chambolle & Stéphane Turolla & Sofia Villas-Boas, 2013. "The Impact of Retail Mergers on Food Prices: Evidence from France," Working Papers hal-00920460, HAL.

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    More about this item

    Keywords

    spatial competition; structural model; discrete choice model; differentiated products; supermarket industry;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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