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Abstract
This paper examines whether ownership and increased competitive pressure affect food
retailers’ market power, analysing whether all actors involved in the food supply chain
deviate from the pricing behaviour that exists under perfect competition. A method
proposed by Roeger (1995) is used to estimate price-cost margins, relaxing the
assumptions of perfect competition and constant returns to scale. The obtained results
show that foreign investments and consolidation have a positive and significant impact on
the market power of food processors and retailers. Food processors, agricultural
producers and wholesalers have lower price-cost margins than retailers, which suggests
that these actors price closer to marginal costs being more concerned with maximising
social welfare or that the former have higher costs than retailers. The results are robust to
various estimation techniques and specifications.