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Local Market Structure and Consumer Prices: Evidence from a Retail Merger

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  • Dennis Rickert
  • Jan Philip Schain
  • Joel Stiebale

Abstract

This paper analyzes the effects of a merger between a German supermarket chain and a soft discounter on consumer prices. We exploit geographic price variation within retail chains and brands and use a difference‐in‐differences estimator to compare regional markets with changes in market structure to unaffected markets. Our results indicate that both insiders and outsiders raised average prices after the merger, particularly in regions with high expected changes in retail concentration. In contrast, we estimate price declines in regions that did not experience a rise in concentration but were potentially affected by cost savings within the merged entity.

Suggested Citation

  • Dennis Rickert & Jan Philip Schain & Joel Stiebale, 2021. "Local Market Structure and Consumer Prices: Evidence from a Retail Merger," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 692-729, September.
    • Handle: RePEc:bla:jindec:v:69:y:2021:i:3:p:692-729
    DOI: 10.1111/joie.12275
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    Cited by:

    1. Elena Argentesi & Paolo Buccirossi & Roberto Cervone & Tomaso Duso & Alessia Marrazzo, 2018. "Price or Variety? An Evaluation of Mergers Effects in Grocery Retailing," CESifo Working Paper Series 7035, CESifo.
    2. Holler, Emanuel & Rickert, Dennis, 2022. "How resale price maintenance and loss leading affect upstream cartel stability: Anatomy of a coffee cartel," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    3. Clemens Fuest & Florian Neumeier & Daniel Stöhlker, 2020. "The Pass-Through of Temporary VAT Rate Cuts in German Supermarket Retail," ifo Working Paper Series 341, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    4. Clemens Fuest & Florian Neumeier & Daniel Stöhlker, 2021. "The Pass-Through of Temporary VAT Rate Cuts: Evidence from German Supermarket Retail," CESifo Working Paper Series 9149, CESifo.
    5. repec:ags:aaea22:336009 is not listed on IDEAS

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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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