IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v34y2018i3p524-541.html
   My bibliography  Save this article

Heterogeneous impacts from a retail grocery acquisition: Do national and store brand prices respond differently?

Author

Listed:
  • Metin Çakır
  • William G. Secor

Abstract

We investigate the extent to which a grocery retailer merger has different effects on the prices of national and store brands. Using retail scanner data, we retrospectively analyze a food retail acquisition in a large U.S. city. We focus on fluid milk and ready‐to‐eat (RTE) cereal categories, which represent a relatively homogenous and a relatively differentiated product category, respectively. We use a difference‐in‐difference estimation framework to obtain the causal effect of the acquisition on prices for the acquiring retailer. The primary finding is that the acquisition has heterogeneous price effects in the relatively differentiated RTE cereal category. The implications of results for consumers, food retailing, and merger analysis are discussed [EconLit citations: L11, L13, L22, L81].

Suggested Citation

  • 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.
    • Handle: RePEc:wly:agribz:v:34:y:2018:i:3:p:524-541
    DOI: 10.1002/agr.21545
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/agr.21545
    Download Restriction: no
    File URL: https://libkey.io/10.1002/agr.21545?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Justine S. Hastings, 2004. "Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California," American Economic Review, American Economic Association, vol. 94(1), pages 317-328, March.
    2. Cotterill, Ronald W & Putsis, William P, Jr & Dhar, Ravi, 2000. "Assessing the Competitive Interaction between Private Labels and National Brands," The Journal of Business, University of Chicago Press, vol. 73(1), pages 109-137, January.
    3. Davis David E., 2010. "Prices, Promotions, and Supermarket Mergers," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 8(1), pages 1-27, November.
    4. Marie-Laure Allain & Claire Chambolle & Stéphane Turolla & Sofia B. Villas-Boas, 2013. "The Impact of Retail Mergers on Food Prices : Evidence from France," Working Papers 2013-18, Center for Research in Economics and Statistics.
    5. Leibtag, Ephraim S. & Kaufman, Phillip R., 2003. "Exploring Food Purchase Behavior of Low-Income Households: How Do They Economize?," Agricultural Information Bulletins 33711, United States Department of Agriculture, Economic Research Service.
    6. Michael B. Ward & Jay P. Shimshack & Jeffrey M. Perloff & J. Michael Harris, 2002. "Effects of the Private-Label Invasion in Food Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 961-973.
    7. Christophe Bontemps & Valérie Orozco & Vincent Réquillart, 2008. "Private Labels, National Brands and Food Prices," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(1), pages 1-22, August.
    8. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    9. Michael A. Cohen & Ronald W. Cotterill, 2011. "Assessing The Impact Of Retailer Store Brand Presence On Manufacturer Brands In An Equilibrium Framework," Journal of Industrial Economics, Wiley Blackwell, vol. 59(3), pages 372-395, September.
    10. Ronald Cotterill & William Putsis, 2000. "Market Share and Price Setting Behavior for Private Labels and National Brands," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 17(1), pages 17-39, August.
    11. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2014. "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 67-100.
    12. Mills, David E, 1995. "Why Retailers Sell Private Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(3), pages 509-528, Fall.
    13. Howard Smith, 2004. "Supermarket Choice and Supermarket Competition in Market Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(1), pages 235-263.
    14. Narasimhan, Chakravarthi & Wilcox, Ronald T, 1998. "Private Labels and the Channel Relationship: A Cross-Category Analysis," The Journal of Business, University of Chicago Press, vol. 71(4), pages 573-600, October.
    15. Jean-Francois Houde, 2012. "Spatial Differentiation and Vertical Mergers in Retail Markets for Gasoline," American Economic Review, American Economic Association, vol. 102(5), pages 2147-2182, August.
    16. Pradeep K. Chintagunta & André Bonfrer & Inseong Song, 2002. "Investigating the Effects of Store-Brand Introduction on Retailer Demand and Pricing Behavior," Management Science, INFORMS, vol. 48(10), pages 1242-1267, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Metin Çakır & Joseph V. Balagtas & Abigail M. Okrent & Mariana Urbina‐Ramirez, 2021. "Effects of Package Size on Household Food Purchases," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 781-801, June.
    2. Metin Çakır & Xiangwen Kong & Clare Cho & Alexander Stevens, 2020. "Rural Food Retailing and Independent Grocery Retailer Exits," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1352-1367, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Marie-Laure Allain & Claire Chambolle & Stéphane Turolla & Sofia Villas-Boas, 2013. "The Impact of Retail Mergers on Food Prices: Evidence from France," Working Papers hal-00920460, HAL.
    3. Steve McCorriston, 2002. "Why should imperfect competition matter to agricultural economists?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 29(3), pages 349-371, July.
    4. Raj Sethuraman, 2009. "Assessing the External Validity of Analytical Results from National Brand and Store Brand Competition Models," Marketing Science, INFORMS, vol. 28(4), pages 759-781, 07-08.
    5. Irz, Xavier & Mazzocchi, Mario & Réquillart, Vincent & Soler, Louis-Georges, 2015. "Research in Food Economics: past trends and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 187-237, March.
    6. Chi-Cheng Wu & Chih-Jen Wang, 2005. "A Positive Theory of Private Label: A Strategic Role of Private Label in a Duopoly National-Brand Market," Marketing Letters, Springer, vol. 16(2), pages 143-161, April.
    7. Marie-Laure Allain & Claire Chambolle & Stéphane Turolla & Sofia B. Villas-Boas, 2017. "Retail Mergers and Food Prices: Evidence from France," Journal of Industrial Economics, Wiley Blackwell, vol. 65(3), pages 469-509, September.
    8. Rong Luo, 2018. "Store brands and retail grocery competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(4), pages 653-668, October.
    9. Ying, Xiongwei & Anders, Sven M., 2013. "Competition between Private Label and National Brand for Health-differentiated Food Product: A Canadian Retailing Case," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151280, Agricultural and Applied Economics Association.
    10. Richards, Timothy J. & Hamilton, Stephen F. & Patterson, Paul M., 2010. "Spatial Competition and Private Labels," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(2), pages 1-26, August.
    11. Ian Sheldon & Richard Sperling, 2003. "Estimating the Extent of Imperfect Competition in the Food Industry: What Have We Learned?," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 89-109, March.
    12. Bocionek, Milena & Anders, Sven M., 2012. "Estimating Price Rigidity in Vertically Differentiated Food Product Categories with Private Labels," Staff Paper Series 139931, University of Alberta, Department of Resource Economics and Environmental Sociology.
    13. Meilin Ma & Ralph Siebert, 2021. "The Impact of Private Label Introduction on Assortment, Prices, and Profits of Retailers," CESifo Working Paper Series 9380, CESifo.
    14. Amrouche, Nawel & Yan, Ruiliang, 2012. "Implementing online store for national brand competing against private label," Journal of Business Research, Elsevier, vol. 65(3), pages 325-332.
    15. Kuo, Chia-Wei & Yang, Shu-Jung Sunny, 2013. "The role of store brand positioning for appropriating supply chain profit under shelf space allocation," European Journal of Operational Research, Elsevier, vol. 231(1), pages 88-97.
    16. Gabrielsen, Tommy Staahl & Sorgard, Lars, 2007. "Private labels, price rivalry, and public policy," European Economic Review, Elsevier, vol. 51(2), pages 403-424, February.
    17. Johansen, Bjørn Olav, 2012. "Private Labels, Rent Shifting And Consumer Welfare," Working Papers in Economics 02/12, University of Bergen, Department of Economics.
    18. Sheldon, Ian M., 2017. "The Competitiveness Of Agricultural Product And Input Markets: A Review And Synthesis Of Recent Research," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 49(1), pages 1-44, February.
    19. Castellari, Elena & Moro, Daniele Daniele & Platoni, Silvia & Sckokai, Paolo, 2014. "Investigating the impact of Private Labels on National Brand prices in the Italian yogurt market," 2014 Third Congress, June 25-27, 2014, Alghero, Italy 173020, Italian Association of Agricultural and Applied Economics (AIEAA).
    20. Dubois, Pierre & Jodar-Rosell, Sandra, 2010. "Price and Brand Competition between Differentiated Retailers: A Structural Econometric Model," IDEI Working Papers 604, Institut d'Économie Industrielle (IDEI), Toulouse.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:agribz:v:34:y:2018:i:3:p:524-541. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.