Micro-Level Analysis of Mexican Retail Markets and Their Response to Changes in Market Structure and Competition Policies
This paper develops the following price indicators to measure the relative efficiency (functioning) of markets: (a) price dispersion, (b) price volatility, and (c) price transmission (speed, completeness, and symmetry). The paper uses these indicat...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/110401515422368009/Micro-level-analysis-of-Mexican-retail-markets-and-their-response-to-changes-in-market-structure-and-competition-policies http://hdl.handle.net/10986/29157 |
| Summary: | This paper develops the following price
indicators to measure the relative efficiency (functioning)
of markets: (a) price dispersion, (b) price volatility, and
(c) price transmission (speed, completeness, and symmetry).
The paper uses these indicators to study trends and
conditions of the outlet level in retail prices for common
commodities sold throughout Mexico. The analysis examines
price patterns for each indicator across commodities,
regions, and time. The descriptive results indicate that
although there is (expected) heterogeneity in the behavior
of these indicators across commodities, location variables
explain the most variation in the indicators. There are
clear and persistent regional- and commodity-specific
effects. Thus, the study concludes that Mexico is not one,
well-integrated national market. The study tested whether
changes in these indicators (increased efficiency) have the
expected correlation with measures affecting the functioning
of markets. It considered changes in competition and entry
of large retail stores in the local retail market. These
changes affect market efficiency in the way theory would
predict. The results suggest that these indicators are good
measures of the relative efficiency (functioning) of
markets. The findings also suggest that efforts to monitor
markets using these indicators may be useful. For example,
for policy makers who are concerned about the distributional
effects of liberalizing trade, the indicators may predict
where price impacts will be felt the most and by whom. In
addition, the indicators provide preliminary information
about relative competition levels, which may be helpful in
saving the time and effort of the competition authorities
and possibly making them more effective. |
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