Retail Food Prices and Retailer Market Power: Evidence from the Greater Los Angeles Area

Meilin Ma, Tina L. Saitone, Richard J. Volpe, Richard J. Sexton, and Michelle Saksena

from ARE Update Vol. 21, No. 6, Jul/Aug, 2018

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Abstract

Our analysis of transaction-level data for the Greater Los Angeles Area shows that relatively small food retailers charge substantially higher prices than supermarkets. Higher market concentration and sales shares in local food markets also allow small food retailers to raise prices, especially when those small retailers do not directly compete with supermarkets.

Supermarkets tend not to adjust prices according to competitive conditions in local markets. These
results present a policy concern, because low-income consumers often live in “food desert”
areas without ready access to supermarkets.

Keywords

Market concentration, market shares, small food retailers, supermarkets, and WIC program

Citation

Meilin Ma, Tina L. Saitone, Richard J. Volpe, Richard J. Sexton, and Michelle Saksena. "Retail Food Prices and Retailer Market Power: Evidence from the Greater Los Angeles Area." ARE Update 21(6)(2018):5-8. University of California Giannini Foundation of Agricultural Economics.
https://giannini.ucop.edu/publications/are-update/issues/2018/21/6/retail-food-prices-and-retailer-market-power-evide/