Description
The food retail sector has experienced a period of strong growth throughout the last decades in Europe and, particularly, in Portugal. These structural transformations are related with changes in economic conditions and in consumer habits. The most visible consequence of this transformation is the appearance of large economic groups, such as retail chains of supermarkets and hypermarkets. The growth of these retail chains is associated with an increase in products variety, in quality service and with competitive prices. But it is also related to an unequal bargaining power compared to suppliers, with the possibility of rise of deadweight losses, especially for the small suppliers, which brands are not so strong near consumers.The Portuguese food retail sector is characterized by a relatively concentrated market structure, with the two main retailers representing more than 45% of the market share. It is also charaterized by solid companies and by the existence of an unequal bargaining power, favorable to retailers, that appears in the context of the relations with some of their suppliers.
Due to some fragilities revealed by the agricultural sector, the purpose of this work is to analyse the impact of the food retail structure on agricultural producers profitability. Using an OLS model, we estimate econometric regressions for the period 2004-2012, which relate margins in agricultural sector with margins and market concentration indexes in food retail sector.
The results show a positive impact of the food retail sector in agricultural producers margins. Nevertheless, we suggest a more robust analysis, particularly involving the specific relations between each retailer and its suppliers.
| Period | Sept 2013 → 14 Nov 2014 |
|---|---|
| Held at | University of Porto, Portugal |
| Degree of Recognition | Master |
Keywords
- Food Retail
- Agriculture
- Market Power
- Market Concentration