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Price Reactions And Organic Price Premiums For Private Label And Branded Milk

  • Zhuang, Yan
  • Dimitri, Carolyn
  • Jaenicke, Edward C.

Using Nielsen Homescan data set from 52 markets in the United States, this paper assesses the price interactions among the four fluid milk categories (organic private label, organic national brand, non-organic private label and non-organic national brand), how demographic variables and product properties in a market affect milk prices, and the impacts of private label and organic milk market shares on milk prices. We find several types of price competition exist among the four milk categories, including for example symmetric cooperative (non-organic private label vs. non-organic branded milk) and asymmetric dominant-fringe (both organic branded vs. organic private label and non-organic national brand vs. organic national brand. We also find that the organic premium for private label milk decreases with increases in the aggregate private label market share, but increases with increases in the aggregate organic market share. Alternatively, the organic price premium for national brand milk decreases with increases in both the private label share and the organic share.

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File URL: http://purl.umn.edu/116388
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Paper provided by European Association of Agricultural Economists & Agricultural and Applied Economics Association in its series 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany with number 116388.

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Date of creation: 2010
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Handle: RePEc:ags:eaa115:116388
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  1. 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.
  2. 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.
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  4. 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.
  5. Glaser, Lewrene K. & Thompson, Gary D., 2000. "Demand For Organic And Conventional Beverage Milk," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36346, Western Agricultural Economics Association.
  6. Douadia Bougherara & Pierre Combris, 2009. "Eco-labelled food products: what are consumers paying for?," Working Papers 26426, Institut National de la Recherche Agronomique, France.
  7. 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.
  8. Pedro A. Alviola & Oral Capps, 2010. "Household demand analysis of organic and conventional fluid milk in the United States based on the 2004 Nielsen Homescan panel," Agribusiness, John Wiley & Sons, Ltd., vol. 26(3), pages 369-388.
  9. Chung L. Huang & Biing-Hwan Lin, 2007. "A Hedonic Analysis of Fresh Tomato Prices among Regional Markets," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(4), pages 783-800.
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  12. Bontemps, Christophe & Orozco, Valerie & Requillart, Vincent, 2005. "Confirming the Price Effects of Private Labels Development," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24735, European Association of Agricultural Economists.
  13. Li Tian & Ronald W. Cotterill, 2005. "Constrained price, address, or logit brand demand models: An econometric comparison in the Boston fluid milk market," Agribusiness, John Wiley & Sons, Ltd., vol. 21(2), pages 149-166.
  14. 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.
  15. Cotterill, Ronald W & Putsis, William P, Jr & Dhar, Ravi, 2000. "Assessing the Competitive Interaction between Private Labels and National Brands," The Journal of Business, University of Chicago Press, vol. 73(1), pages 109-37, January.
  16. Benaissa Chidmi & Rigoberto A. Lopez & Ronald W. Cotterill, 2005. "Retail oligopoly power, dairy compact, and Boston milk prices," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 477-491.
  17. William P. Putsis, 1999. "Empirical analysis of competitive interaction in food product categories," Agribusiness, John Wiley & Sons, Ltd., vol. 15(3), pages 295-311.
  18. Dimitri, Carolyn & Oberholtzer, Lydia, 2009. "Marketing U.S. Organic Foods: Recent Trends From Farms to Consumers," Economic Information Bulletin 58615, United States Department of Agriculture, Economic Research Service.
  19. Batte, Marvin T. & Hooker, Neal H. & Haab, Timothy C. & Beaverson, Jeremy, 2007. "Putting their money where their mouths are: Consumer willingness to pay for multi-ingredient, processed organic food products," Food Policy, Elsevier, vol. 32(2), pages 145-159, April.
  20. Gary D. Thompson & Julia Kidwell, 1998. "Explaining the Choice of Organic Produce: Cosmetic Defects, Prices, and Consumer Preferences," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(2), pages 277-287.
  21. Bontemps, Christophe & Orozco, Valérie & Réquillart, Vincent, 2008. "Private Labels, National Brands and Food Prices," IDEI Working Papers 402, Institut d'Économie Industrielle (IDEI), Toulouse.
  22. Smith, Travis A. & Lin, Biing-Hwan & Huang, Chung L., 2008. "Organic Premiums of U.S. Fresh Produce," 2008 Conference, April 21-22, 2008, St. Louis, Missouri 37626, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  23. Carlos Arnade & Munisamy Gopinath & Daniel Pick, 2008. "Brand Inertia in U.S. Household Cheese Consumption," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 813-826.
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