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Impacts from a retail grocery acquisition: Do national and store brand prices respond differently?

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  • Secor, William
  • Çakır, Metin

Abstract

We investigate the extent to which a grocery retailer merger has different effects on the prices of national and store brands. Using retail scanner data, we retrospectively analyze a food retail acquisition in a large United States city. We focus on fluid milk and ready-to-eat cereal categories, which represent a relatively homogenous and a relatively differentiated product category, respectively. We use a difference-in-difference estimation framework to obtain the causal effect of the acquisition on prices for the acquiring retailer. Our findings provide evidence that store brands in differentiated product categories could allow a retailer to improve its market power.

Suggested Citation

  • 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, Boston, Massachusetts 235945, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea16:235945
    DOI: 10.22004/ag.econ.235945
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    File URL: http://ageconsearch.umn.edu/record/235945/files/2016_AAEA_Meeting_SecorCakirManuscript.pdf
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    References listed on IDEAS

    as
    1. Davis David E., 2010. "Prices, Promotions, and Supermarket Mergers," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 8(1), pages 1-27, November.
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    3. Ronald Cotterill & William Putsis, 2000. "Market Share and Price Setting Behavior for Private Labels and National Brands," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 17(1), pages 17-39, August.
    4. Marie-Laure Allain & Claire Chambolle & Stéphane Turolla & Sofia B. Villas-Boas, 2013. "The Impact of Retail Mergers on Food Prices : Evidence from France," Working Papers 2013-18, Center for Research in Economics and Statistics.
    5. Volpe, Rickard James, 2014. "National Brands, Private Labels, and Food Price Inflation," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 46(4), pages 575-591, November.
    6. Çakır, Metin & Balagtas, Joseph V., 2014. "Consumer Response to Package Downsizing: Evidence from the Chicago Ice Cream Market," Journal of Retailing, Elsevier, vol. 90(1), pages 1-12.
    7. Howard Smith, 2004. "Supermarket Choice and Supermarket Competition in Market Equilibrium," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 235-263.
    8. 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.
    9. Mills, David E, 1995. "Why Retailers Sell Private Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(3), pages 509-528, Fall.
    10. repec:zwi:journl:v:59:y:2011:i:3:p:372-395 is not listed on IDEAS
    11. Leibtag, Ephraim S. & Kaufman, Phillip R., 2003. "Exploring Food Purchase Behavior of Low-Income Households: How Do They Economize?," Agricultural Information Bulletins 33711, United States Department of Agriculture, Economic Research Service.
    12. Michael B. Ward & Jay P. Shimshack & Jeffrey M. Perloff & J. Michael Harris, 2002. "Effects of the Private-Label Invasion in Food Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 961-973.
    13. Volpe III, Rickard James, 2014. "National Brands, Private Labels, and Food Price Inflation," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 46(4), pages 1-16, November.
    14. Narasimhan, Chakravarthi & Wilcox, Ronald T, 1998. "Private Labels and the Channel Relationship: A Cross-Category Analysis," The Journal of Business, University of Chicago Press, vol. 71(4), pages 573-600, October.
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    Keywords

    Agribusiness; Consumer/Household Economics;

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