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Chain-store Pricing and the Structure of Retail Markets

Author

Listed:
  • Matt Olczak

    (Centre for Competition Policy, University of East Anglia)

Abstract

This paper investigates competition between chain-stores and independents in the UK opticians' industry, using the relationship between the number of outlets present in a local market and the market size. Chain-stores are shown to have a significant effect on local market competition. In addition, the empirical approach is extended to allow inferences on the nature and extent of product differentiation. The results are broadly consistent with a model of vertical product differentiation in which chain-stores adopt national pricing strategies. The evidence suggests that the nature of competition between independent retailers depends on whether a chain-store is present.

Suggested Citation

  • Matt Olczak, 2006. "Chain-store Pricing and the Structure of Retail Markets," Working Papers 06-7, Centre for Competition Policy, University of East Anglia.
    • Handle: RePEc:ccp:wpaper:wp06-07
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    File URL: http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP06-7.pdf
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    More about this item

    Keywords

    Chain-stores; product differentiation; national pricing;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services

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