[econophile]

[ QUOTE ]
There is however a somewhat convincing history of economies of scale in the grocery industry. Meaning a merger of Whole Foods and Wild Oats could actually reduce prices for consumers, which is a good thing.


[/ QUOTE ]

scale economies mean that the average unit cost to producers will decrease as the company gets bigger. whethere those savings are passed along to the customer depends on the market structure. and you're right to point out that location is the main source of market power for grocery stores (and many other retailers).