Spatial competition in the French supermarket industry

This paper challenges the conventional wisdom on the competitive grocery retail sector in France. To that end, 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. Finally, I perform counterfactual experiments to quantify the expected gain of an additional store on consumer welfare and retail prices.


Subject(s):
Issue Date:
2012
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/207984
Total Pages:
45
Series Statement:
12-01




 Record created 2017-04-01, last modified 2017-04-26

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