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Abstract

This paper reviews the basic antitrust standards for the supermarket industry including definition of product and geographic markets and the exercise of coordinated and unilateral market power. It surveys the structure-conduct-performance and the New Empirical Industrial Organization literature to highlight alternative tests for supermarket power. The focus is a supermarket chain's ability to exercise buyer as well as seller power. Recent research on vertical pricing topics including noncompetitive pricing games, double marginalization, private labels, vertical foreclosure, vertical price leadership and price transmission expand the analysis to market channel pricing issues. The availability of comprehensive scanner data, new economic theory and extensive computing power now allows one to estimate food manufacturer and supermarket retailer pricing conduct in the wholesale market jointly with retailer conduct in the consumer market.

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