Concentration, Retail Markups, and Countervailing Power: Evidence from Retail Lotteries

Renato Giroldo and Brett Hollenbeck

MPRA Paper from University Library of Munich, Germany

Abstract: In this note, we investigate the causal link between market concentration and markups in a retail setting. We study the Washington retail cannabis industry, which features exogenous variation in market concentration that resulted from retail licenses being awarded via lotteries. We observe markups directly. We find a negative causal relationship between markups and concentration, where more concentrated markets have significantly lower markups and wholesale prices. The results provide direct evidence of countervailing buyer power by retailers. These results highlight the value of using industry specific data and rich models of competition to advance the debate on concentration and markups.

Keywords: markups; market concentration; retail; countervailing buyer power; cannabis policy (search for similar items in EconPapers)
JEL-codes: E20 L13 L16 L22 L41 L81 M31 R12 R32 (search for similar items in EconPapers)
Date: 2021-07-31
New Economics Papers: this item is included in nep-com, nep-hme, nep-ind, nep-mac and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:109039

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