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Premium Private Labels, Supply Contracts, Market Segmentation, and Spot Prices

Author

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  • Bazoche Pascale

    (INRA-LORIA and Laboratoire d’Econométrie de l’Ecole Polytechnique, France)

  • Giraud-Héraud Eric

    (INRA-LORIA and Laboratoire d’Econométrie de l’Ecole Polytechnique, France)

  • Soler Louis-Georges

    (INRA-LORIA. 65 Bd de Brandebourg, 94205, Ivry sur Seine, France)

Abstract

In recent years, European retailers have modified the market segmentation in the meat and the fresh produce sectors by implementing new private labels which aim to guarantee higher quality and food safety. As a result, retailers impose more demanding production requirements and rely on contractual relationships with upstream producers. Meat and vegetables shelve spaces are now composed of generic products supplied from competitive spot markets, and premium private labels based on long term supply contracts. In this paper we propose a model of vertical relationships between producers and retailers in order to analyze the consequences of such strategies. In particular, we analyze the interest of producers to commit to these new private labels, their effects on spot market prices, and the resulting market segmentation between the spot market and supply contracts.

Suggested Citation

  • Bazoche Pascale & Giraud-Héraud Eric & Soler Louis-Georges, 2005. "Premium Private Labels, Supply Contracts, Market Segmentation, and Spot Prices," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-30, February.
  • Handle: RePEc:bpj:bjafio:v:3:y:2005:i:1:n:7
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    References listed on IDEAS

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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 147-165, June.
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    Cited by:

    1. Caprice, Stéphane & Von Schlippenbach, Vanessa & Wey, Christian, 2014. "Supplier Fixed costs and Retail Market Monopolization," TSE Working Papers 14-524, Toulouse School of Economics (TSE).
    2. Teresa De Noronha Vaz & Peter Nijkamp, 2009. "Multitasking in the rural world: technological change and sustainability," International Journal of Agricultural Resources, Governance and Ecology, Inderscience Enterprises Ltd, vol. 8(2/3/4), pages 111-129.
    3. Giraud-Heraud, Eric & Grazia, Cristina & Hammoudi, Abdelhakim, 2007. "Agrifood safety standards, market power and consumer misperceptions," 105th Seminar, March 8-10, 2007, Bologna, Italy 7849, European Association of Agricultural Economists.
    4. Vanessa von Schlippenbach & Isabel Teichmann, 2012. "The Strategic Use of Private Quality Standards in Food Supply Chains," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1189-1201.
    5. Venturini, Luciano, 2006. "Vertical competition between manufacturers and retailers and upstream incentives to innovate and differentiate," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10050, European Association of Agricultural Economists.
    6. Combris, Pierre & Pinto, Alexandra Seabra & Fragata, Antonio & Giraud-Heraud, Eric, 2007. "Does taste beat food safety? Evidence from the Pera Rocha case in Portugal," 105th Seminar, March 8-10, 2007, Bologna, Italy 7879, European Association of Agricultural Economists.

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