Price competition and private labels in the U.S. packaged salad market

Xiao Meng and Edward C. Jaenicke

Applied Economics Letters, 2021, vol. 28, issue 17, 1484-1490

Abstract: We study the price competition in the U.S. packaged salads market by testing two price competition hypotheses: Bertrand competition versus sequential pricing model. The former is standard for oligopoly pricing in the IO literature. The latter provides a formal mechanism for second-mover, price-undercutting behaviour by private-label brands, owned by mainstream supermarkets, that grew their market share dramatically in the second half of the 2000s. Applying Vuong and Gasmi (1991)’s test, we show that observed market prices and market shares fit best to Bertrand competition.

Date: 2021
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DOI: 10.1080/13504851.2020.1827132

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