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Assessing the Impact of Retailer Store Brand Presence on Manufacturer Brands in an Equilibrium Framework

Author

Listed:
  • Michael Cohen

    (New York University)

  • Ronald W. Cotterill

    (University of Connecticut)

Abstract
This article assesses the impact of retailer own-labeled products on manufacturer brand prices, profitability, and consumer welfare. Using chain-level retail scanner data from Boston's white uid milk market the analysis estimates a random coecients logit demand model employing a mathematical programming equilibrium constraint(MPEC) method. One can compute pro t margins implied for a set of pricing games using estimated demand parameters. Nonparametrically identi ed non-nested tests identify the most likely pricing game for the Boston white uid milk market. Results from this analysis indicate that branded milk manufacturers are Stackelberg leaders to retailers and store brand milks are procured at or near cost. This baseline model of the market is matched against a series of counterfactual markets to assess the impact of strong store brands. One counterfactual simulation considers the absence of the leading retailer's own labeled milk. Another considers the market without store brand milks. Simulation results indicate that strong store brands increase channel profits, retailer pro ts, and consumer welfare, while having mixed effects on equilibrium manufacturer brand retailer prices. In addition results testify that with no store brand milk consumer welfare is approximately 11.5% lower.

Suggested Citation

  • Michael Cohen & Ronald W. Cotterill, 2009. "Assessing the Impact of Retailer Store Brand Presence on Manufacturer Brands in an Equilibrium Framework," Food Marketing Policy Center Research Reports 119, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    • Handle: RePEc:zwi:fpcrep:119
    as

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    File URL: http://fmpc.uconn.edu/publications/rr/rr119.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Amrouche, Nawel & Pei, Zhi & Yan, Ruiliang, 2022. "Mail-in-rebate and coordination strategies for brand competition," International Journal of Production Economics, Elsevier, vol. 247(C).
    2. Anonymous & Bosch, Darrell J., 2013. "Table of contents," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(01), February.
    3. 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.
    4. Stéphane Turolla, 2016. "Spatial Competition in the French Supermarket Industry," Annals of Economics and Statistics, GENES, issue 121-122, pages 213-259.
    5. Hsiao, Lu & Chen, Ying-Ju & Xiong, Hui & Liu, Haoyu, 2022. "Incentives for disclosing the store brand supplier," Omega, Elsevier, vol. 109(C).
    6. Rong Luo, 2018. "Store brands and retail grocery competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(4), pages 653-668, October.
    7. Metin Çakır & William G. Secor, 2018. "Heterogeneous impacts from a retail grocery acquisition: Do national and store brand prices respond differently?," Agribusiness, John Wiley & Sons, Ltd., vol. 34(3), pages 524-541, June.
    8. Yizao Liu & Xuan Chen & Adam N. Rabinowitz & Benjamin Campbell, 2020. "Demand, challenges, and marketing strategies in the retail promotion of local brand milk," Agricultural Economics, International Association of Agricultural Economists, vol. 51(5), pages 655-668, September.
    9. Hovhannisyan, Vardges & Bozic, Marin, 2013. "A Benefit-Function Approach to Studying Market Power: An Application to the U.S. Yogurt Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), pages 1-15, August.
    10. Inge Geyskens & Barbara Deleersnyder & Marnik G. Dekimpe & Didi Lin, 2024. "Do consumers benefit from national-brand listings by hard discounters?," Journal of the Academy of Marketing Science, Springer, vol. 52(1), pages 97-118, January.

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