Supermarket Choice, Supermarket Pricing and the Merger and Demerger in Market Equilibrium.

This paper estimates a model of retail oligopoly where consumers choose between stores using consumer data which specifies the firm operating the chosen store and not the specific store (as is convenient practice for retail surveys). The location and other characteristics of the stores are known. Interations in utility are premitted between consumer characteristics, observed store characteristics, and those unobserved characteristics (e.g. grocery quality) which are associated with the firm operating the store rather than the store itself. Expenditure at the store is determined from the same utility function. A Nash pricing equation is used to evaluate the effect of merger and demerger on equilibrium prices and economics welfare.