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Estimating Market Power And Pricing Conduct For Private-Label And National Brands In A Product-Differentiated Oligopoly: The Case Of A Frozen Vegetable Market

  • Vickner, Steven S.
  • Davies, Stephen P.
  • Fulton, Joan R.
  • Vantreese, Valerie L.

This paper develops two brand-level demand models, where prices are treated as endogenous, to estimate unilateral market power in a representative product-differentiated oligopolistic food market. The results are estimated using point-of-purchase scanner data and are used to quantify the impact of a private-label brand on the economic performance of national brands. Specifically, our study calculates demand parameter estimates and returns to retailer vertical coordination for the frozen vegetable market—the third largest private-label food and beverage category in the United States, after ice cream and carbonated beverages. Consistent with broader industry trends, empirical evidence suggests that the private-label brand maintained a slight competitive advantage over Birds Eye and Green Giant.

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Article provided by Food Distribution Research Society in its journal Journal of Food Distribution Research.

Volume (Year): 31 (2000)
Issue (Month): 02 (July)

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Handle: RePEc:ags:jlofdr:27755
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  1. William P. Putsis Jr. & Ronald W. Cotterill & Ravi Dhar, 1999. "Assessing the Competitive Interaction between Private Labels and National Brands," Yale School of Management Working Papers ysm131, Yale School of Management.
  2. Cotterill, Ronald W. & Haller, Lawrence E., 1997. "An Econometric Analysis of the Demand for RTE Cereal: Product Market Definition and Unilateral Market Power Effects," Research Reports 25218, University of Connecticut, Food Marketing Policy Center.
  3. Giraud-Heraud, Eric & Soler, Louis-Georges & Tanguy, Herve, 1999. "Avoiding Double Marginalisation in Agro-Food Chains," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(2), pages 179-98, June.
  4. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  5. 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.
  6. Cotterill, Ronald W., 1994. "Scanner Data: New Opportunities For Demand And Competitive Strategy Analysis," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 23(2), October.
  7. 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.
  8. Ronald W. Cotterill & William P. Putsis Jr., 1998. "Testing the Theory: Vertical Strategic Interaction and Demand Functional Form," Food Marketing Policy Center Research Reports 040, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
  9. Alston, Julian M & Foster, Kenneth A & Green, Richard D, 1994. "Estimating Elasticities with the Linear Approximate Almost Ideal Demand System: Some Monte Carlo Results," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 351-56, May.
  10. Marie-Laure ALLAIN, 2002. "The balance of power between producers and retailers : a differentiation model," Discussion Papers (REL - Recherches Economiques de Louvain) 2002034, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  11. Joseph J. Spengler, 1950. "Vertical Integration and Antitrust Policy," Journal of Political Economy, University of Chicago Press, vol. 58, pages 347.
  12. Chalfant, James A, 1987. "A Globally Flexible, Almost Ideal Demand System," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(2), pages 233-42, April.
  13. Kinsey, Jean D. & Senauer, Benjamin, 1996. "Food Marketing In An Electronic Age: Implications For Agricultural Producers," Working Papers 14303, University of Minnesota, The Food Industry Center.
  14. 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.
  15. repec:jaa:jagape:v:31:y:1999:i:1:p:1-13 is not listed on IDEAS
  16. Vickner, Steven S. & Davies, Stephen P., 1999. "Estimating Market Power And Pricing Conduct In A Product-Differentiated Oligopoly: The Case Of The Domestic Spaghetti Sauce Industry," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(01), April.
  17. Ronald W. Cotterill, 1997. "The food distribution system of the future: Convergence towards the US or UK model?," Agribusiness, John Wiley & Sons, Ltd., vol. 13(2), pages 123-135.
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