Spatial Competition in the French Supermarket Industry

Stéphane Turolla

Annals of Economics and Statistics, 2016, issue 121-122, 213-259

Abstract: This paper challenges the conventional wisdom of a competitive grocery retail sector in France. To measure the intensity of competition in this sector, 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. Retail competition in the French supermarket industry appears to be highly localized in that margins are very sensitive to the presence of a competitor within a few kilometers. Finally, I perform counterfactual experiments to quantify the expected gain of an additional store on consumer welfare and retail prices,

Keywords: Spatial Competition; Structural Model; Discrete Choice Model; Differentiated Products; Supermarket Industry. (search for similar items in EconPapers)
JEL-codes: C35 L13 L81 (search for similar items in EconPapers)
Date: 2016
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http://www.jstor.org/stable/10.15609/annaeconstat2009.121-122.213 (text/html)

Related works:
Working Paper: Spatial competition in the French supermarket industry (2012)
Working Paper: Spatial competition in the French supermarket industry (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2016:i:121-122:p:213-259

DOI: 10.15609/annaeconstat2009.121-122.213

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