The Australian grocery industry: a competition perspective

Rhonda Smith
(2006) 50 The Australian Journal of Agricultural and Resource Economics 33 - 50

 

Abstract

This article discusses whether at a theoretical level the large and growing role of the vertically integrated supermarket chains raises a buyer-power concern because of potential harm to other retailers, suppliers, and/or consumers. Even if this is possible, whether it is a real concern depends on whether provision exists to constrain the exercise of that power through market responses, such as entry, or through regulatory provisions, such as those contained in the Trade Practices Act.

Contents

1. Introduction
2. The economics of grocery retailing
• The grocery product
• Economies of scale
• Economies of scope
• Barriers to entry
3. Supplier relationships
• Buyer power
• Possible consequences of buyer power for suppliers and competition
4. The impact on consumers
5. Policy issues
• Enforcement
• Industry inquiries
6. Conclusion

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