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The Relationship Between Price And Market Structure: Evidence From The Us Food Retail Industry

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  • Hovhannisyan, Vardges
  • Bozic, Marin

Abstract

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.

Suggested Citation

  • Hovhannisyan, Vardges & Bozic, Marin, 2016. "The Relationship Between Price And Market Structure: Evidence From The Us Food Retail Industry," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236222, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea16:236222
    DOI: 10.22004/ag.econ.236222
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    References listed on IDEAS

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    Keywords

    Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; Industrial Organization;
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