Price and Promotion Effects of Supermarket Mergers

Journal of Agricultural & Food Industrial Organization, Vol. 8, No. 1, Article 8, 2010

29 Pages Posted: 2 Feb 2011

See all articles by David E. Davis

David E. Davis

South Dakota State University - Department of Economics

Date Written: 2010

Abstract

I use a unique data set of retail food prices to analyze mergers between supermarket chains. The data allow for an examination of the effects of mergers on prices, the frequency of promotions, and the depth of promotions. I find that increases in a chain’s share of the total US food sales are associated with price decreases, suggesting that supermarkets enjoy economies of scale and/or benefit from an improved bargaining position relative to their suppliers after a merger. I also find that mergers are associated with decreases in the frequency and depth of price-promotions.

Keywords: Food prices, supermarket, merger, price discrimination

JEL Classification: L11, L81, D4

Suggested Citation

Davis, David E., Price and Promotion Effects of Supermarket Mergers (2010). Journal of Agricultural & Food Industrial Organization, Vol. 8, No. 1, Article 8, 2010, Available at SSRN: https://ssrn.com/abstract=1478600

David E. Davis (Contact Author)

South Dakota State University - Department of Economics ( email )

Brookings, SD 57007-0895
United States

HOME PAGE: http://sdstate.edu/econ/faculty/david-davis/index.cfm

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