THE RELATIONSHIP BETWEEN PRICE AND MARKET STRUCTURE: EVIDENCE FROM THE US FOOD RETAIL INDUSTRY

Vardges Hovhannisyan and Marin Bozic

No 236222, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: This study utilizes unique product barcode, store, and retail real estate data to calculate consistent estimates of the effects of retail market structure on food prices in the US. Our uniquely disaggregated data allow for identification strategy that corrects for the type of endogeneity that plagues many previous studies on price-concentration relationship. Empirical findings from an instrumental-variables fixed-effects model indicate that retail concentration is endogenous to price determination. Further, retail prices are found to rise with retail concentration. Importantly, ignoring endogeneity results in a severe downward bias in the estimated effects of concentration on food prices.

Keywords: Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; Industrial Organization (search for similar items in EconPapers)
Pages: 29
Date: 2016-05-25
New Economics Papers: this item is included in nep-agr and nep-com
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:236222

DOI: 10.22004/ag.econ.236222

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