IDEAS home Printed from https://ideas.repec.org/a/bla/jindec/v59y2011i3p372-395.html
   My bibliography  Save this article

Assessing The Impact Of Retailer Store Brand Presence On Manufacturer Brands In An Equilibrium Framework

Author

Listed:
  • MICHAEL A. COHEN
  • RONALD W. COTTERILL

Abstract

This article assesses the impact of retailer own-labeled products on manufacturer brand prices, profitability, and consumer welfare. Using chain-level retail scanner data from Boston's white fluid milk market the analysis estimates a random coefficients logit demand model employing a mathematical programming equilibrium constraint(MPEC) method. One can compute profit margins implied for a set of pricing games using estimated demand parameters. Nonparametrically identified non-nested tests identify the most likely pricing game for the Boston white fluid milk market. Results from this analysis indicate that branded milk manufacturers are Stackelberg leaders to retailers and store brand milks are procured at or near cost. This baseline model of the market is matched against a series of counterfactual markets to assess the impact of strong store brands. One counterfactual simulation considers the absence of the leading retailer's own labeled milk. Another considers the market without store brand milks. Simulation results indicate that strong store brands increase channel profits, retailer profits, and consumer welfare, while having mixed effects on equilibrium manufacturer brand retailer prices. In addition results testify that with no store brand milk consumer welfare is approximately 11.5% lower.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Michael A. Cohen & Ronald W. Cotterill, 2011. "Assessing The Impact Of Retailer Store Brand Presence On Manufacturer Brands In An Equilibrium Framework," Journal of Industrial Economics, Wiley Blackwell, vol. 59(3), pages 372-395, September.
  • Handle: RePEc:bla:jindec:v:59:y:2011:i:3:p:372-395
    DOI: j.1467-6451.2011.00460.x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/j.1467-6451.2011.00460.x
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sofia Berto Villas-Boas, 2007. "Vertical Relationships between Manufacturers and Retailers: Inference with Limited Data," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 625-652.
    2. Smith, Richard J, 1992. "Non-nested.Tests for Competing Models Estimated by Generalized Method of Moments," Econometrica, Econometric Society, vol. 60(4), pages 973-980, July.
    3. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    4. Céline Bonnet & Pierre Dubois, 2010. "Inference on vertical contracts between manufacturers and retailers allowing for nonlinear pricing and resale price maintenance," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 139-164.
    5. Jagmohan S. Raju & Raj Sethuraman & Sanjay K. Dhar, 1995. "The Introduction and Performance of Store Brands," Management Science, INFORMS, vol. 41(6), pages 957-978, June.
    6. Mills, David E, 1995. "Why Retailers Sell Private Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(3), pages 509-528, Fall.
    7. Corts, Kenneth S., 1998. "Conduct parameters and the measurement of market power," Journal of Econometrics, Elsevier, vol. 88(2), pages 227-250, November.
    8. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anonymous & Marchant, Mary A. & McKenzie, Andrew M. & Paudel, Krishna P., 2014. "Table of Content," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 46(02), May.
    2. Stéphane Turolla, 2016. "Spatial Competition in the French Supermarket Industry," Annals of Economics and Statistics, GENES, issue 121-122, pages 213-259.
    3. Hovhannisyan, Vardges & Bozic, Marin, 2013. "A Benefit-Function Approach to Studying Market Power: An Application to the U.S. Yogurt Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), August.
    4. Secor, William & Çakır, Metin, 2016. "Impacts from a retail grocery acquisition: Do national and store brand prices respond differently?," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235945, Agricultural and Applied Economics Association.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jindec:v:59:y:2011:i:3:p:372-395. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.