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Organic label and profits sharing in the French fluid milk market
[Label Bio et partage des profits sur le marché du lait liquide en France]

Author

Listed:
  • Zohra Bouamra-Mechemache

    (GREMAQ - Groupe de recherche en économie mathématique et quantitative - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

  • Céline Bonnet

    (GREMAQ - Groupe de recherche en économie mathématique et quantitative - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

Abstract

The paper assesses how the value added created by the existence of an organic label in a vertical chain is shared among manufacturers and retailers in the French uid milk market. Using a struc- tural econometric model of consumer substitution patterns and of vertical relationships, we show that organic label leads to a higher bargaining power in favor of manufacturer. Total margins are heterogeneous among products. They are lower for organic brands (37%) compared to conventional ones (52%). On the contrary, rms would bene t more from organic products than for conventional milk while our results suggest the opposite result for retailers.

Suggested Citation

  • Zohra Bouamra-Mechemache & Céline Bonnet, 2013. "Organic label and profits sharing in the French fluid milk market [Label Bio et partage des profits sur le marché du lait liquide en France]," Post-Print hal-02746459, HAL.
    • Handle: RePEc:hal:journl:hal-02746459
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    References listed on IDEAS

    as
    1. Michaela Draganska & Daniel Klapper & Sofia B. Villas-Boas, 2010. "A Larger Slice or a Larger Pie? An Empirical Investigation of Bargaining Power in the Distribution Channel," Marketing Science, INFORMS, vol. 29(1), pages 57-74, 01-02.
    2. Rachel Griffith & Lars Nesheim, 2008. "Household willingness to pay for organic products," CeMMAP working papers CWP18/08, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    3. Tirtha Dhar & Jeremy D. Foltz, 2005. "Milk by Any Other Name … Consumer Benefits from Labeled Milk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 214-228.
    4. Leslie M. Marx & Greg Shaffer, 1999. "Predatory Accommodation: Below-Cost Pricing without Exclusion in Intermediate Goods Markets," RAND Journal of Economics, The RAND Corporation, vol. 30(1), pages 22-43, Spring.
    5. van Doorn, Jenny & Verhoef, Peter C., 2011. "Willingness to pay for organic products: Differences between virtue and vice foods," International Journal of Research in Marketing, Elsevier, vol. 28(3), pages 167-180.
    6. Glaser, Lewrene K. & Thompson, Gary D., 2000. "Demand For Organic And Conventional Beverage Milk," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36346, Western Agricultural Economics Association.
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    Cited by:

    1. Haucap, Justus & Heimeshoff, Ulrich & Klein, Gordon J. & Rickert, Dennis & Wey, Christian, 2013. "Bargaining power in manufacturer-retailer relationships," DICE Discussion Papers 107, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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