The Price Effects of an Emerging Retail Market

This paper analyzes the effects of a changing market structure on the price dynamics of final goods in an emerging Czech retail market. We estimate the extent of up-and downstream market power and find that the changing market structure was responsible for an average yearly price decrease of retailed products by 0.8 percentage points during 2000-2005. At the same time,, however we anticipate that a period of mergers and acquisitions that has already started could cause yearly price increases of retailed products by 1.2 percentage points-approximately 0.5 percentage points in the consumer price index inflation-over the next ten years.