3 ms·

> monopsony This really doesn't pass the smell test. There are multiple very large supermarket chains here. They aren't monopsonies, by the simple fact that th

by lucumo 3y ago

> monopsony This really doesn't pass the smell test. There are multiple very large supermarket chains here. They aren't monopsonies, by the simple fact that there are multiple. They are also large and very good at negotiating and optimising their supply chains. If any of their suppliers were to have absurdly high margins they would fuck them out of existence. Especially for commodities like farm produce which you can get almost anywhere. The supermarkets make enormous profits, but it's nearly all due to scale. Their margins on products are in the low single digits. (In the Netherlands. The largest chain, Ahold Delhaize, does make higher margins in the US.)

LightHugger 3y ago
It's good to be careful with this logic, because it's now common practice for one large holding group to own all of the differently branded stores to create illusion of choice.
- lucumo 3y ago
  That's a good point in general, but it is not true of the largest Dutch supermarket chains. The four largest chains (Albert Heijn, Jumbo, Aldi, Lidl) are all independent of each other. A bunch of smaller chains have bundled their buying power into Superunie, which in turn is part of EMD. Superunie would end up somewhere in the middle of the top 5 in the Dutch market. EMD has about 10% of the European market. There's really no monopsony here.
  - eecc 3y ago
    Right, so a market composed of 4-5 buyers might not be a monopsony, can we say oligopsony then? Still a non-market condition where severe distortions are likely
    - lucumo 3y ago
      It's way to simple to look at a number and say "oligopsony". You'd need to look at how the market functions and how actors on it act. In this particular market: players make razor-thin margins (low single digits as mentioned before), and have regular price wars to fight over market share. It seems 5 is enough to keep players from making excessive profits.

by lucumo 3y ago

LightHugger 3y ago

It's good to be careful with this logic, because it's now common practice for one large holding group to own all of the differently branded stores to create illusion of choice.

lucumo 3y ago
That's a good point in general, but it is not true of the largest Dutch supermarket chains. The four largest chains (Albert Heijn, Jumbo, Aldi, Lidl) are all independent of each other. A bunch of smaller chains have bundled their buying power into Superunie, which in turn is part of EMD. Superunie would end up somewhere in the middle of the top 5 in the Dutch market. EMD has about 10% of the European market. There's really no monopsony here.
- eecc 3y ago
  Right, so a market composed of 4-5 buyers might not be a monopsony, can we say oligopsony then? Still a non-market condition where severe distortions are likely
  - lucumo 3y ago
    It's way to simple to look at a number and say "oligopsony". You'd need to look at how the market functions and how actors on it act. In this particular market: players make razor-thin margins (low single digits as mentioned before), and have regular price wars to fight over market share. It seems 5 is enough to keep players from making excessive profits.