Private labels, price rivalry, and public policy

Abstract

The article examines how the existence of a retailer owned brand, private label, affects the price setting of a national brand. We find that the potential for a private label introduction may lead to price concessions from the national brand producer, but that actual private label introduction as such may very well lead to higher retail prices on national brands. We argue that this may have important implications for the interpretation of empirical results and the public policy towards national brands.