Paper The Structure of Grocery Retail Markets and Food Waste
We examine the impact of grocery-store density and grocery-market concentration on food waste, using a two-echelon perishable-inventory model. Fresh-grocery stores, differentiated by their locations (upstream tier), maintain inventories and compete by setting prices and/or service levels. Households (downstream tier) choose amongst stores and make grocery-replenishment decisions. The expiring inventory at each tier is the food waste. We find that the effects on household and store food waste are opposite, yet household waste dominates store waste and thus determines the overall effects. Higher store density changes household purchase behavior because of closer stores, and due to different equilibrium prices/service-levels that ensue in denser markets. We characterize conditions under which these effects reduce/increase food waste. Numerical calibration shows that, for all plausible cases, increasing store density reduces food waste, achieving a 6%-14% waste reduction for a 10% reduction in the distance between stores, while making groceries more affordable. Reducing market concentration, on the other hand, might increase food waste substantially. That is, from a policy perspective, promoting laws and programs that encourage the opening of new grocery stores can greatly decrease food waste, whereas stiffer anti-trust laws and enforcement might increase food waste.
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