University of Cambridge > Talks.cam > Economics & Policy Seminars, CJBS > PRICE OR VARIETY? AN EVALUATION OF MERGERS EFFECTS IN GROCERY RETAILING

PRICE OR VARIETY? AN EVALUATION OF MERGERS EFFECTS IN GROCERY RETAILING

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Ahead of the seminar a light lunch will be available outside LT4 from 13:00

We study the effect of a merger between two Dutch supermarket chains to assess whether assortment decisions are key strategic instruments for firms responding to local market conditions. We adopt a difference in differences strategy that exploits local variation in the merger’s effects. We show that the merger did not affect prices but it led the merging parties to reposition their assortment to avoid cannibalisation. While the low variety target’s stores reduced the depth of their assortment when in direct competition with the acquirer, the latter increased their assortment. A simple theoretical model of variety competition explains most of our findings.

This talk is part of the Economics & Policy Seminars, CJBS series.

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