OBSERVATIONS of gross margin information' and familiarity with prices in several cities led us to believe that considerable differences exist between price levels in various local markets. We were specifically interested in investigating the degree of price variation among local retail markets (cities) and in testing the usefulness of existing price theory as developed by Chamberlin, Robinson, Stigler, and many others in explaining such differences. We were also concerned with assessing the appropriateness of the market structure approach in explaining market performance as advocated by Bain.A Several authors have investigated aspects of competition in local retail food markets.3 Most of these studies were based on excellent conceptual frameworks but were somewhat insufficient in regard to empirical evidence. Some of these studies were based primarily on data from only one market area and utilized insufficient price information.