Oligopoly Competition with Dominant Firm and Chain Stores

Abstract

Purpose of the article: The text of this article deals with oligopolistic competition on the food market in terms of behaviour of grocers and with the impact of this competition upon market competition in the sector. Oligopoly can be defined as a market model of imperfect competition, for which a small number of firms within a sector is characteristic, as well as their high level of mutual dependence when considering their decision making.
Scientific aim: The aim of the paper is to find out whether the oligopoly with the dominant firm competition happens to be created in the food-products market, in what range this competition appears in given sector and whether it can notably influence the price level of the food products and therefore have an important impact on consumer demand in the Czech Republic.
Methodology/methods: When creating the article, we used information from published statistical studies of Incoma Company about revenues of food production between 2008 and 2009; the main methods used for the scientific investigation are: the method of description (a description of market separation among food chains), further the mathematical method (percentage rate of change) and partially other methods.
Findings: As is evident from the share of firms in the market of food products, there is no chain store, which would meet the criterion of market dominance. The number one on the Czech market of food products remains a long-term group Schwarz (Kaufland, Lidl), but its market share, expressed as sales indicators, is only a quarter of total group revenues.
Conclusions: We can say that none of the individual companies on the market with food products meets the criterion of dominant place on the market; however, this does not exclude the possibility of cartel agreements between companies on the prices or duopoly reactions.