Market power in the retail food industry: Evidence from Finland

Abstract

Buyer power and competition policy in food supply chains has emerged as an important economic issue and a highly sensitive item on the policy agenda around the world. In Finland, the increasing concentration of the retailer sector has raised concern over existence and gradual growth of buyer power in this sector. The purpose of this paper is to investigate the possible existence of buyer power in the Finnish food market. More specifically, we follow an approach used by Lloyd et al (2009) to measure oligopoly and oligopsony market power in the Finnish food retail industry. The results suggest that the spread between producer and retailer prices in Finland is not consistent with perfectly competitive behaviour, and might thus be caused, at least as a candidate amongst other factors, by the existence of oligopsony power in Finnish food retailing.