Private Labels and International Trade: Trading Variety for Volume
AbstractThis paper explores the role of pooled-producer, e.g. private label, trade intermediation in shaping the range and diversity of exports. Direct sales maintain a firm’s unique product characteristics (‘brand equity’), whereas trade through an intermediary can take two forms - either a wholesaling arrangement that (also) maintains the exporter’s unique brand but imposes a higher marginal cost (via double marginalization), or a ‘private label’ contract under which the firm’s product is pooled with other firms’ output and re-sold under a new private label brand created by the intermediary. This paper focuses on the latter, and shows that the availability of the private label option results in greater total export volumes and lower average prices for consumers, but fewer independent varieties available in equilibrium. Welfare implications are mixed: consumers trade variety for volume, firms face greater competition from the new pooled-products, and intermediaries capture much of the gains from trade.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4133.
Date of creation: 2013
Date of revision:
private labels; export mode; intermediaries; heterogeneous firms; international retailers;
Other versions of this item:
- Emily Blanchard & Tatyana Chesnokova & Gerald Willmann, 2013. "Private Labels and International Trade: Trading Variety for Volume," Kiel Working Papers 1829, Kiel Institute for the World Economy.
- Emily Blanchard & Tatyana Chesnokova & Gerald Willmann, 2013. "Private Labels and International Trade: Trading Variety for Volume," School of Economics Working Papers 2013-01, University of Adelaide, School of Economics.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
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