The supermarket puzzle: What's holding back competition at the checkout? NZIER Insight 134

New Zealand's supermarket sector remains highly concentrated, but adding competitors will not necessarily lower grocery prices. This NZIER Public Good Insight examines the barriers to stronger supermarket competition, distinguishing between those that policy can address and the underlying constraints arising from New Zealand's market size, geography and economies of scale.

It considers the potential benefits and costs of different policy interventions, including improving wholesale access, separating existing supermarket businesses and supporting new entry. It highlights the tension between economies of scale and competition, and argues that reforms should be judged by whether they deliver better outcomes for consumers, rather than simply increasing the number of supermarket chains. 

NZIER Insights are short notes designed to stimulate discussion on topical issues or to illustrate frameworks available for analysing economic problems. They are produced by NZIER as part of its self-funded Public Good Programme. The purpose of NZIER’s Public Good Programme is to inform debate and educate on important economic and policy issues facing Aotearoa New Zealand. More information on NZIER’s Public Good Programme can be found at https://www.nzier.org.nz/public-good.