Strategic Effects of Private Labels and Horizontal Integration

Strategic Effects of Private Labels and Horizontal Integration.

Why would retailers want to introduce private labels in a given product category? This paper examines this question, focusing especially on the effects of the emergence of private labels on the relative power of retailers vis a vis national brand manufacturers. The analysis allows for different degrees of competition in the vertical structure, and for linear and non-linear pricing. We show that retailers’ gains from introducing private labels are increasing in the concentration of the retail market both with linear and non-linear pricing.

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nternational Review of Retail, Distribution and Consumer Research, Vol. 14, N° 3, 321-335. July, 2004.

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