The effects of private label introduction on prices and market shares of national brands

We investigate the impacts of Private Label (PL) introduction on prices and market shares of national brands (NBs). During the sample period, PL products were introduced at different times in different geographical markets. The econometric model exploits this fact and compares NB prices in markets where PL was introduced to those in markets where PL had not been introduced. We found the response on price is not homogeneous, but it varies among brands and segments. Moreover, our results suggest that an aggregate level estimation fails to identify the response at the brand level. These results corroborate the importance of using brand specific models in appraising the effects of a PL introduction on market prices and consumer welfare. Lastly, the analysis allows us to consider the possibility of a cross effect by exploiting the effect of a PL introduction on NB market shares in segments close to the refrigerated milk market.