The Solution to $10 Eggs Lies Within New York City Limits

New York Times

6 days ago

A big feature of Zohran Mamdani's upset win in the New York City Democratic mayoral primary was his focus on the unfairness of current food prices. He proposed piloting five city-run grocery stores. Voters loved it. Pundits mocked it. The idea was labeled communist, irrelevant, dangerous and silly. But the mockery missed the larger point: Cities have the power to bring down food prices and bring life to food deserts. They just haven't been using it.
The food system in the United States is rigged in favor of big retailers and suppliers in several ways. Big retailers often flex their muscles to demand special deals; to make up the difference, suppliers then charge the smaller stores more. Those discounts are one reason independent grocers struggle to survive. They're a major reason we have food deserts. They're also a major reason that prices are so insane.
Consider eggs. At the independent supermarket near my apartment, the price for a dozen white eggs last week was $5.99. At a major national retailer a few blocks away, it was $3.99. (For an identical box of cereal, the price difference was $3.) Any number of factors may contribute to a given price, but market power is a particularly consequential one.
The thing is, preferential discounts can violate federal law. A 1936 statute called the Robinson-Patman Act forbids suppliers from offering sweetheart deals that aren't based on actual efficiencies of scale. The idea behind the law was to make sure smaller retailers could get a fair shake and consumers could get the benefit of real competition. But in the 1980s, amid a general climate of deregulation, the government largely backed off. For the two decades after 2000, no cases were brought at all. When Lina Khan became chair of the Federal Trade Commission in 2021, she brought two Robinson-Patman cases. But one of the first acts of President Trump's new commissioners was to pull the plug on one of them.
Cities like New York don't have to wait for the federal government to act. They can pass their own laws against price discrimination and include real penalties. That could improve profit margins for existing independent stores. It would help them to survive in the areas where people most lack access to good, affordable groceries and fresh food. And it would incentivize more small groceries to set up shop — all developments that could bring the kind of neighborhood-level competition that drives down prices.
The standard objection to this logic is that big national chain retailers earn those discounts simply by being more efficient. That may be true in individual cases, but more broadly, the evidence is not so straightforward. Independent grocers that band together in associations — as many of those in New York City do — can be just as efficient as their larger competitors. Even if the little stores' costs are higher in a few areas, any economist will tell you that more retail competition leads to lower prices overall.
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