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The Impact of Retail Store Brands on Manufacturer Brands: A Generalization of Steiner’s Elasticity Model

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Listed:
  • Michael Cohen

    (New York University)

  • Ronald W. Cotterill

    (University of Connecticut)

Abstract

Store brands are thought to improve a retailer's position relative to leading brand manufacturers and to reduce retail prices. Steiner (2004) o ers a characterization of typical industry structures by considering the relationship between interbrand and intrabrand elasticities. We estimate a model of demand and use elasticity estimates to characterize Boston's uid milk market as falling into one of Steiner's \typical industry structures". In addition to investigating the relationship between interbrand and intrabrand elasticities we derive and test structural models of supply channel conduct that explicitly identify the pricing conduct that is implicit in Steiner's \typical industry structures". Using scanner data for brand level milk sales milk sales at leading retail chains in Boston we show that store brands do in fact improve the pro t position of retailer vis a vis the manufacturer, reduce retail prices, and improve total welfare in the market.

Suggested Citation

  • Michael Cohen & Ronald W. Cotterill, 2008. "The Impact of Retail Store Brands on Manufacturer Brands: A Generalization of Steiner’s Elasticity Model," Food Marketing Policy Center Research Reports 110, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    • Handle: RePEc:zwi:fpcrep:110
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    File URL: http://fmpc.uconn.edu/publications/rr/rr110.pdf
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    References listed on IDEAS

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    4. Sofia Berto Villas-Boas, 2007. "Vertical Relationships between Manufacturers and Retailers: Inference with Limited Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 625-652.
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    8. 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.
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    Cited by:

    1. Sylvie Tchumtchoua & Ronald W. Cotterill, 2010. "Optimal Brand and Generic Advertising Policies in a Dynamic Differentiated Product Oligopoly," Food Marketing Policy Center Research Reports 126, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.

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    More about this item

    Keywords

    Discrete Choice Models; Vertical Structural Models; Non-Nested Hypothesis testing; Economics of Private Label Retailing;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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