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Market Power, Brand Characteristics and Demand for Retail Grocery Products

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  • Paul H. Jensen

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Elizabeth Webster

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

This paper examines the effects of market power and product differentiation on demand for grocery products in Australia over the period 2002 to 2005. We construct a model of the relationship between demand, market power and brand characteristics and then estimate the model using monthly data on price, quantity and volume sold for a bundle of 92 brands in 12 product categories from major supermarket stores across Australia. We also use data on the characteristics of each brand such as whether the product is environment-friendly, is a “private label”, or is made from recyclable materials. Our results suggest that firms are able to affect their demand curves through both product differentiation strategies and through market power.

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Bibliographic Info

Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2006n05.

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Length: 18 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:iae:iaewps:wp2006n05

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Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
Phone: +61 3 8344 2100
Fax: +61 3 8344 2111
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Web page: http://www.melbourneinstitute.com/
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  1. Wolinsky, Asher, 1983. "Prices as Signals of Product Quality," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 50(4), pages 647-58, October.
  2. Png, I P L & Reitman, David, 1995. "Why Are Some Products Branded and Others Not?," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 38(1), pages 207-24, April.
  3. Blair,Roger D. & Cotter,Thomas F., 2005. "Intellectual Property," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521540674.
  4. Elizabeth Webster & Paul H. Jensen, 2004. "Patterns of Trademarking Activity in Australia," Melbourne Institute Working Paper Series, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne wp2004n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  5. Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 98(4), pages 659-79, November.
  6. Scott Morton, Fiona M., 2000. "Barriers to entry, brand advertising, and generic entry in the US pharmaceutical industry," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 18(7), pages 1085-1104, October.
  7. Jagmohan S. Raju & Raj Sethuraman & Sanjay K. Dhar, 1995. "The Introduction and Performance of Store Brands," Management Science, INFORMS, INFORMS, vol. 41(6), pages 957-978, June.
  8. William E. Griffiths & Paul H. Jensen & Elizabeth Webster, 2005. "The Effects on Firm Profits of the Stock of Intellectual Property Rights," Melbourne Institute Working Paper Series, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne wp2005n04, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  9. Blair,Roger D. & Cotter,Thomas F., 2005. "Intellectual Property," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521833165.
  10. Hurwitz, Mark A & Caves, Richard E, 1988. "Persuasion or Information? Promotion and the Shares of Brand Name and Generic Pharmaceuticals," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 31(2), pages 299-320, October.
  11. Wiggins, Steven N & Raboy, David G, 1996. "Price Premia to Name Brands: An Empirical Analysis," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 44(4), pages 377-88, December.
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