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Effects of the private-label invasion in food industries

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Author Info

  • Ward, Michael B.
  • Shimshack, Jay P.
  • Perloff, Jeffrey M.
  • Harris, J. Michael

Abstract

Using supermarket scanner data, we test a variety of hypotheses from trade journals about the invasion of private-label food products. According to conventional industry wisdom, name-brand firms defended their brands against new private-label products by lowering their prices, engaging in additional promotional activities, and increasingly differentiating their products. Our empirical evidence is inconsistent with these beliefs.

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File URL: http://mpra.ub.uni-muenchen.de/22186/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 22186.

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Date of creation: Nov 2002
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Publication status: Published in American Journal of Agricultural Economics 4.84(2002): pp. 961-973
Handle: RePEc:pra:mprapa:22186

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Keywords: private label; entry; price; promotional activity; differentiation; supermarket;

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References

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  1. Bontems, Philippe & Monier-Dilhan, Sylvette & Requillart, Vincent, 1999. "Strategic Effects of Private Labels," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(2), pages 147-65, June.
  2. Salop, Steven, 1977. "The Noisy Monopolist: Imperfect Information, Price Dispersion and Price Discrimination," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 393-406, October.
  3. Connor, John M. & Peterson, Everett B., 1991. "Market-Structure Determinants Of National Brand-Private Label Price Differences Of Manufactured Food Products," Working Papers 116099, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
  4. Mills, David E, 1999. "Private Labels and Manufacturer Counterstrategies," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(2), pages 125-45, June.
  5. Richard G. Frank & David S. Salkever, 1997. "Generic Entry and the Pricing of Pharmaceuticals," NBER Working Papers 5306, National Bureau of Economic Research, Inc.
  6. Perloff, Jeffrey M. & Suslow, Valerie Y. & Seguin, Paul J., 1995. "Higher Prices from Entry: Pricing of Brand-Name Drugs," Competition Policy Center, Working Paper Series qt1ts674n2, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  7. Cotterill, Ronald W. & Putsis, William P., Jr. & Dhar, Ravi, 2000. "Market Share and Price Setting Behavior For Private Labels and National Brands," Research Reports 25209, University of Connecticut, Food Marketing Policy Center.
  8. G. Galizzi & L. Venturini & S. Boccaletti, 1997. "Vertical relationships and dual branding strategies in the Italian food industry," Agribusiness, John Wiley & Sons, Ltd., vol. 13(2), pages 185-195.
  9. Ronald Cotterill & William Putsis, 2000. "Market Share and Price Setting Behavior for Private Labels and National Brands," Review of Industrial Organization, Springer, vol. 17(1), pages 17-39, August.
  10. Egbert DIERKER & Hildegard DIERKER, 1998. "Product Differentation and Market Power," Vienna Economics Papers vie9804, University of Vienna, Department of Economics.
  11. Hinloopen, Jeroen & Martin, Stephen, 1997. "Market-Structure Determinants of National Brand-Private Label Price Differences of Manufactured Food Products: Comment," Journal of Industrial Economics, Wiley Blackwell, vol. 45(2), pages 219-23, June.
  12. MacDonald, James M, 2000. "Demand, Information, and Competition: Why Do Food Prices Fall at Seasonal Demand Peaks?," Journal of Industrial Economics, Wiley Blackwell, vol. 48(1), pages 27-45, March.
  13. Mills, David E, 1995. "Why Retailers Sell Private Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(3), pages 509-28, Fall.
  14. Perloff, Jeffrey M & Salop, Steven C, 1985. "Equilibrium with Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 52(1), pages 107-20, January.
  15. Kohn, Meir G. & Shavell, Steven, 1974. "The theory of search," Journal of Economic Theory, Elsevier, vol. 9(2), pages 93-123, October.
  16. Nijssen, Edwin J & Van Trijp, Hans C M, 1998. "Branding Fresh Food Products: Exploratory Empirical Evidence from the Netherlands," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(2), pages 228-42.
  17. Richard G. Frank & David S. Salkever, 1997. "Generic Entry and the Pricing of Pharmaceuticals," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 75-90, 03.
  18. Nelson, Philip B. & Hilke, John C., 1991. "Retail featuring as a strategic entry or mobility barrier in manufacturing," International Journal of Industrial Organization, Elsevier, vol. 9(4), pages 533-544, December.
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