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

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.


Issue Date:
May 25 2016
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/236222
Page range:
2-29
Total Pages:
29
JEL Codes:
L11
Series Statement:
Selected Paper # 9685




 Record created 2017-04-01, last modified 2017-08-29

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