This study provides an empirical investigation of the relationship between grocery retail concentration and retail dairy product prices in the United States. The analysis was performed based on a unique data set on store-level retail prices provided by the Information Resources Inc. Further, alternative measures of retail concentration were considered, which included revenue and store selling space-based Herfindahl-Hirschman Index that were computed based on a Nielsen TDLinx data set on store characteristics. Results from a reduced-form empirical framework estimated via panel data techniques indicated that grocery retail concentration had a positive statistically significant effect on retail dairy product prices in the analyzed locations during the analyzed period of time. Specifically, a 10% increase in concentration was found to lead to a 0.46% rise in retail dairy product prices. This central result was robust to the way in which retail concentration was measured and was consistent with broader empirical evidence in the literature on retail market power.
Bibliographical noteFunding Information:
The views expressed here are those of the authors and may not be attributed to the US Department of Agriculture , which the authors acknowledge for providing partial support for this research under Cooperative Agreement 58-5000-3-0053 . This study is also funded by the University of Minnesota Food Policy Research Center with support by Agriculture and Food Research Initiative Competitive Grant no. 2012-70002-19403 from the USDA National Institute for Food and Agriculture (Washington, DC) .
- Dairy food products
- Market power
- Retail concentration
- Retail price