Thesis & Dissertations

Market Concentration has been one of the most debatable topics among economists and policymakers in the last two decades. Concentration is a fundamental process affecting retail markets globally. It is visible through changes in number of leading retailers, smaller groceries, market shares, market structures and competition. This phenomenon is creating new challenges and opportunities for existing market players, suppliers, customers and governments as well. In this study, the impact of large retailers’ entry on market concentration in the grocery retail market in Lebanon is explored. The changes of the market concentration between 2004 and 2014 are investigated in four relevant markets as distinct case studies: Lebanon (as one geographical market to assess the concentration on a national level), Beirut area, Mount Lebanon area, Hypermarkets and supermarkets solely in Lebanon. After clear definition and justification of the relevant markets, market concentration is evaluated based on the calculation of concentration ratios, CR4, CR5, and CR10. Furthermore, the impact of concentration on other interrelated economic and customer welfare trends are further elaborated. This study uncovers the oligopolistic nature of the Lebanese grocery retail market. Models from game theory are used to address implications of existing and potential concerns on competition. In light of the study’s findings, the Lebanese grocery retail sector seems to be maintaining high barriers of entry and threat on smaller existing retailers, which further promotes an oligopolistic structure. In this context, large retailers are acting as price takers, and the customer and social welfare is not maximized. Mainly, Cournot and Stackelberg theories are integrated with the findings to interpret the competitive actions of large retailers. Implications reveal that the higher number of large retailers leads to lower prices and increases the consumer surplus. Contemporary concerns in the market are addressed to reveal insight on each of the following dimensions (1) Price discrimination; (2) Non-price competition like Loyalty Schemes adopted by large retailers; (3) The growth of Private-labels and their impact on local manufacturers. This study concludes that the increase in the market power of large retailers is leading to price discrimination approaches which negatively affect the customer surplus. Non-price competition appears to be an important feature of the oligopolistic market, which has adverse impacts on the customer welfare as they are consuming a less favorable brand mix. Still, the entry of large retailers increases the competitiveness which leads to lower prices for customers. The increasing market concentration in the grocery retail sector in Lebanon associated with a greater share of private label sales has important implications on food production at the national level by threatening small producers.