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Common Labels and Market Mechanisms

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  • Christine Boizot-Szantai
  • Sébastien Lecocq
  • Stéphan Marette

Abstract

In this article, the impact of common labels is investigated with both theoretical and empirical approaches. Recent statistics regarding the egg market in France suggest that retailer brands largely adopt common labels. A simple theoretical framework enables us to determine the conditions under which producers and/or retailers with different product qualities decide to post a common label on their products. In particular, a situation of multiple equilibria (one where the label is used by the high-quality seller only and one where it is used by the low-quality seller only) is exhibited when the cost of the label is relatively large. The demand is then estimated for different segments of the French egg market, including producer/retailer brands with/without common labels. The estimates are used to derive expenditure and price elasticities and allow us to calculate welfare measures revealing a relatively large willingness-to-pay for labels.

Suggested Citation

  • Christine Boizot-Szantai & Sébastien Lecocq & Stéphan Marette, 2005. "Common Labels and Market Mechanisms," Midwest Agribusiness Trade Research and Information Center (MATRIC) Publications 05-wp405, Midwest Agribusiness Trade Research and Information Center (MATRIC) at Iowa State University.
  • Handle: RePEc:ias:mpaper:05-wp405
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    Cited by:

    1. Stéphan Marette, 2005. "The Collective-Quality Promotion in the Agribusiness Sector: An Overview," Food and Agricultural Policy Research Institute (FAPRI) Publications 05-wp406, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
    2. Dentoni, Domenico & Menozzi, Davide & Capelli, Maria Giacinta, 2010. "Heterogeneity of Members’ Characteristics and Cooperation within Producer Groups Regulating Geographical Indications: The Case of the “Prosciutto di Parma” Consortium," 116th Seminar, October 27-30, 2010, Parma, Italy 95203, European Association of Agricultural Economists.

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    Keywords

    competition; demand estimation; labels; product differentiation.;

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