Food pricing, competition, and the emerging supercenter format

Abstract

Abstract Much previous research has examined the role of concentration, level of service, and entry barriers on U.S. food retailing profits and prices. Despite the rapid advancement of food supercenters, public policy research evaluating their price impacts remains quite limited. The purpose this study is to examine the price impacts from supercenter entry, growing supercenter market share, and supermarket consolidation from 1993–2003. Findings were that both the market share of supercenter food sales and the marginal impact of supercenter entry did not have a significant impact on food prices in the metropolitan statistical areas (MSAs) analyzed. These are important findings in light of claims that supercenters entry causes a procompetitive effect. Futhermore, changes in market concentration was significantly and positively related to price changes. Therefore, it appears consolidation led to higher prices and any merger‐related cost gains during this period were not passed on to consumers. [EconLit Classifications: D400, L130, L660]. © 2007 Wiley Periodicals, Inc. Agribusiness 23: 295–312, 2007.

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