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National brands versus private labels : an empirical study of competition, advertising and collusion

Authors Parker, Philip M.
Kim, Namwoon
Issue Date 1996-02
Summary This paper considers certain aspects of competition between national brands and quality-equivalent private-label brands (a form of store, house or own-label branding). We investigate the impact of advertising on the ability of brands to increase market power. Supporting recent theoretical arguments (though contradicting others), our industry study reveals that heavy advertising among national brands can increase prices, revenues, and profits for both national brands and private-label brands. In particular, we find that all players can peacefully co-exist: national brands collude amongst themselves, private-label brands collude amongst themselves, and national brands collude with private-label brands. We report seven non-structural and one structural test to support this conclusion.
Language English
Format Working paper
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