Market-Structure Determinants of National Brand-Private Label Price Differences of Manufactured Food Products

John Connor () and Everett Peterson

Journal of Industrial Economics, 1992, vol. 40, issue 2, 157-71

Abstract: This paper estimates the relationships between market structure and the Lerner index of monopoly constructed from price data on processed food products sold through grocery stores. A theoretical model of a differentiated oligopoly specifies two determinants of price-cost margins: the Herfindahl-Hirschman index of seller concentration adjusted for the elasticity of demand and the industry advertising-to-sales ratio. The results indicate that the three principal determinants of price-cost margin variation, in order of their impacts, are: advertising intensity, elasticity of demand, and concentration. Previous structure-performance studies that did not incorporate the elasticity of demand, and concentration. Previous structure-performance studies that did not incorporate the elasticity of demand were probably misspecified. Copyright 1992 by Blackwell Publishing Ltd.

Date: 1992
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Related works:
Working Paper: MARKET-STRUCTURE DETERMINANTS OF NATIONAL BRAND-PRIVATE LABEL PRICE DIFFERENCES OF MANUFACTURED FOOD PRODUCTS (1991)
Working Paper: MARKET-STRUCTURE DETERMINANTS OF NATIONAL BRAND-PRIVATE LABEL PRICE DIFFERENCES OF MANUFACTURED FOOD PRODUCTS (1987)
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