1 Market Structure and Competition in Food Retail: Some Evidences from Brazil*

Abstract – This paper analyzes competition among supermarkets in Brazil. In contrast to part of the economic literature that suggests that the fast growth of big supermarket chains would destroy independent, medium and small supermarkets, we argue that big supermarket chains can coexist with different formats of independent food retailing. As a result competition in food retail is complex and cannot be described as a simple Darwinian process of market concentration. The analysis is divided in two parts. In the first part, the competition between supercenters and traditional grocery stores is examined. Evidences for the district of Sao Paulo, Brazil, suggest that these retailers form separate markets. The second part is focused on neighborhood supermarkets. The results differ from the general belief that independent supermarkets establish higher prices in comparison to big chain supermarkets. The analysis brings to light the heterogeneity of the competitive fringe in the oligopoly model of Brazilian retailing