Is it rational for a large-retailer to sell an own-brand product similar to the branded product of a large manufacturer? A Vertical Product Differentiation Model
No hay miniatura disponible
Archivos
Fecha
2022
Profesor/a Guía
Facultad/escuela
Idioma
en
Título de la revista
ISSN de la revista
Título del volumen
Editor
Universidad de los Andes, Facultad de Economia
Nombre de Curso
Licencia CC
Attribution-NonCommercial-ShareAlike 4.0 International
CC BY-NC-SA 4.0
Deed
Licencia CC
https://creativecommons.org/licenses/by-nc-sa/4.0/
Resumen
A theoretical model was constructed to investigate the conditions that a large retailer must satisfy to increase the quality of the retailer-owned brands towards a greater number of groceries. The key result shows that the restraint given by a vertical integration scheme (producer-distributor) is relaxed for a higher quality-production cost ratio under the assumption of modelling with endogenous quality. Another finding is that the national brand´s production is not altered, which is explained by the fact that this brand is demanded by consumers with high willingness to pay for it. However, the wholesale price decreases and hence the manufacturer’s profit always falls as the quality of own brands rises. This is consistent with the argument that the retailer improves its negotiation capacity with the private manufacturer when it sells an own brand that is a close substitute for the manufacturer’s label, which always forces the wholesale price of the branded product down. © 2022, Universidad de los Andes, Facultad de Economia. All rights reserved.
Notas
Indexación: Scopus.
Palabras clave
Firm strategy and market performance, Industrial economics, Market structure
Citación
Desarrollo y Sociedad, Volume 2022, Issue 90, Pages 77 - 109, 2022
DOI
10.13043/DYS.90.3