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Private Label Products As Experience Goods

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  • Fabian Berges-Sennou
  • Michael Waterson

Abstract

In Europe, food retailing has become more concentrated and private label goods have spread over the last 40 years. They are now a key element of retailers' shelf offer. Using a model in which consumers become informed about the good's quality only in period two, we examine what determines the presence or absence of private label experience goods in supermarkets, taking into account the retailer's reputation commitment involved. Our most novel result is that for products purchased infrequently, introducing a reputable private label is unsustainable. However, more retailer bargaining power increases the likelihood of a private label good being marketed.
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Suggested Citation

  • Fabian Berges-Sennou & Michael Waterson, 2004. "Private Label Products As Experience Goods," Royal Economic Society Annual Conference 2004 34, Royal Economic Society.
    • Handle: RePEc:ecj:ac2004:34
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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, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 26(2), pages 147-165, June.
    2. G. Galizzi & L. Venturini & S. Boccaletti, 1997. "Vertical relationships and dual branding strategies in the Italian food industry," Agribusiness, John Wiley & Sons, Ltd., vol. 13(2), pages 185-195.
    3. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
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    Cited by:

    1. Jean Marie Viaene & Laixun Zhao, 2009. "Tainted Food, Low-Quality Products and Trade," Discussion Paper Series 245, Research Institute for Economics & Business Administration, Kobe University.
    2. Paul W. Dobson & Ratula Chakraborty, 2014. "How Do National Brands And Store Brands Compete?," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2014-07, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    3. Rojas Christian & Lavoie Nathalie & Wang Shinn-Shyr, 2012. "Buyer Power and Vertically Differentiated Retailers," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 10(1), pages 1-28, July.
    4. Viaene, Jean-Marie & Zhao, Laixun, 2015. "Inspection, testing errors and trade in tainted products," Journal of the Japanese and International Economies, Elsevier, vol. 35(C), pages 99-116.

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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