Download file 680 KB Texto completo en español More of: Alexander  Galetovic Fernando Díaz Ricardo Sanhueza

Between 1998 and 2006 supermarket sales became more concentrated. This article shows that the expansion of Chile's two main chains —Cencosud and D&S— reduced food prices, intensified price competition and attenuated the price-concentration relationship.
In a given city, and keeping concentration constant, food prices fall 10.8% with the entry of the first chain with a national distribution center. Entry of a second chain further reduces prices, and the combined fall is 20.9%. The presence of two chains also weakens the price-concentration relationship . If there is no chain in a city and the equivalent number of firms falls by one, the relative price of food rises 2.8%. Once the first chain with a national distribution center appears, the relative price of food increases by less, 1.4%. With two chains, the price increase is only 0.4%.