Main stories
Energy market review Energy market - to be investigated by new competition watchdog..more
Budget logo Budget analysis - latest news
Mark Carney Bank of England - downgrades unemployment threshold

UK growth - GDP up 0.8% in the third quarter of 2013

UK unemployment - down to 7.1% as jobs market improves. More..

The global economy - IMF revises growth forecasts..More
Royal Mail - privatisation comes a step closer with announcement of IPO. More...
   
UK to launch Islamic Bond ..more
Mortgage approvals - highest since Jan 2009...More
Bank of England launches 'forward guidance' policy. Read the full story.
The UK's top 40 Universities for Economics.
Public spending - £11.5bn cuts announced
UK growth - UK avoids triple-dip recession
Benefit cap  - kicks in at £500 per week
UK Budget 2013 - analysis and comment
Student Guide to university Clearing
Quantitative easing - put on hold
Poverty - recession and relative poverty
Welfare reform - the end of universal benefits
Underemployment - over 3 million
CPI inflation - at 2.7%
   
Energy prices - set to rise
Competition policy - new regulator planned
Greek bailout - Euro problems
Top international universities for Economics
Top UK universities for Economics
OECD - latest forecasts for the OECD countries..More
Updates Get the latest updates on the UK economy, including GDP, inflation...More...
  Study guides Latest resources for students from Economics Online.  More...
How to answer data response questions. More...
Multiple choice tests Improve knowledge and understanding of Economics. More...
Market structures revision presentations
Economics tuition - from specialist tutors. Find out more..or REGISTER
City of London The financial crisis reveals a fundamental weakness .. More...
Recommended texts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supermarkets

Increasing concentration

There is clear evidence that the UK supermarket sector is increasingly dominated by a few firms, led by Tesco, Sainsbury and ASDA. The supermarket sector is oligopolistic and the pricing strategy of supermarkets can be understood using game theory approach.

It is also accepted that many farmers and growers are suffering as a result of the increasing monopsony power of the major supermarkets.

The pace of concentration appears to have accelerated over the last five years, as indicated by the following chart showing market shares in 2008. (Source: Verdict, April 2005).

Supermarkets market shares

supermarket chart will load here!

Tesco was prevented by the OFT from purchasing Safeway in 2002, but was allowed to buy 1200 ‘convenience’ stores. By 2005, Tesco had acquired nearly 6% of the convenience food market. (Source: Verdict).

The decline of independent retailers

The rise of the large supermarket chains has, unsurprisingly, coincided with the decline in independent high street retailers.

Over the last 5 years the number of independent retailers has fallen by a third, from 35,000 to 25,000.

Questions

  1. Describe and account for the changes in supermarket concentration from 2000.

  2. Examine the likely effects of this level of concentration.

  3. What remedies are open to regulators to limit market dominance by Tesco?