Competition Effects of Supermarket Services

Alessandro Bonanno and Rigoberto Lopez

No 149176, Research Reports from University of Connecticut, Food Marketing Policy Center

Abstract: This article investigates the competition effects of supermarket food and non-food services using fluid milk as a case study. A simultaneous equation model for services and price competition is estimated with scanner data from 16 supermarket chains operating in six U.S. cities. Empirical results show that a greater scope of services results in higher retail cost, greater supermarket chain-level demand but lower price elasticity, and enhanced market power, all leading to higher milk prices and quantity of milk sold. However, unlike previous research, we conclude that increases in cost rather than market power explain most of the ensuing price increases.

Keywords: Demand and Price Analysis; Marketing (search for similar items in EconPapers)
Pages: 35
Date: 2007-11
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Related works:
Journal Article: Competition Effects of Supermarket Services (2007)
Working Paper: Competition Effects of Supermarket Services (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uconnr:149176

DOI: 10.22004/ag.econ.149176

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