Retail market structure and consumer prices in the euro area

Emanuela Ciapanna and Concetta Rondinelli

No 1744, Working Paper Series from European Central Bank

Abstract: We investigate the empirical relationship between product market competition and prices in the retail grocery sector in the euro area. The study uses micro-data from ACNielsen on chain stores' census characteristics and price levels for a broad variety of products. We construct Herfindahl-Hirschman indices of concentration at different levels of market aggregation (buying group and parent company) to investigate their effects on prices. The analysis confirms the inverse relation between downstream market competition among retailers and price levels for most of the reference products. Though less conclusive in terms of statistical significance, the proposed estimates also point to a welfare enhancing role of buying groups. Our results indicate that buying groups provide a balancing mechanism between retailers' and producers' bargaining power, in support of the countervailing power hypothesis. JEL Classification: L1, L4, L8, E31

Keywords: buying group; market concentration; parent company; price levels; regional Herfindahl-Hirschman indices (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-com, nep-eur and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20141744

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