Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Friday, July 20, 2012

Spatial competition in the French supermarket industry

Posted by D. Daniel Sokol

Stephane TUROLLA (INRA) addresses Spatial competition in the French supermarket industry.

ABSTRACT: 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.

http://lawprofessors.typepad.com/antitrustprof_blog/2012/07/spatial-competition-in-the-french-supermarket-industry.html

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