The Effect of Mergers on Variety in Grocery Retailing

Tomaso Duso, Elena Argentesi, Paolo Buccirossi, Roberto Cervone and Alessia Marrazzo

No 16230, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the effect of a merger between two Dutch supermarket chains to assess its effect on the depth as well as composition of assortment. We adopt a difference-in-differences strategy that exploits local variation in the merger's effects, controlling for selection on observables through a matching procedure when defining our control group. We show that the merger led the merging parties to reposition their assortment to avoid cannibalization in the areas where they directly competed before the merger. While the low-variety target's stores reduced the depth of their assortment when in direct competition with the acquirer, the latter increased their assortment. This suggests that variety is a strategic variable in retail chains' response to changes in local competition.

Keywords: Variety; Assortment; Mergers; Ex-post evaluation; Retail sector; Supermarkets; Grocery (search for similar items in EconPapers)
JEL-codes: C23 D22 K21 L1 L41 L66 L81 (search for similar items in EconPapers)
Date: 2021-06
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Journal Article: The effect of mergers on variety in grocery retailing (2021)
Working Paper: The Effect of Mergers on Variety in Grocery Retailing (2021)
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