Zusammenfassung:
We quantify changes in concentration, market power and welfare in the UK grocery retail sector from 2002 to 2021. We document that an expansion of discounter-format retailers coincided with declining retail and manufacturer concentration across most narrowly defined product categories. We develop an equilibrium model that incorporates consumer choice over retailers and products with Nash-in-Nash bargaining between manufacturers and retailers. Applying this model to the breakfast cereals market, we find that discounter expansion - through store openings, efficiency gains and changes to products - reduced concentration and average prices, increased consumer and total surplus, and especially benefited households near newly opened stores.